Figure 2.4
-Joe runs a business and needs to decide how many hours to stay open. Figure 2.4 illustrates his marginal benefit of staying open for each additional hour. Suppose that Joe's marginal cost of staying open per hour is $40. How many hours should Joe stay open?
A) 4 hours
B) 5 hours
C) 3 hours
D) 6 hours

Question

Figure 2.4
-Joe runs a business and needs to decide how many hours to stay open. Figure 2.4 illustrates his marginal benefit of staying open for each additional hour. Suppose that Joe's marginal cost of staying open per hour is $40. How many hours should Joe stay open?
A) 4 hours 
B) 5 hours 
C) 3 hours 
D) 6 hours

Quizplus · Accepted Answer

Joe should stay open as long as the marginal benefit of staying open for an additional hour is greater than or equal to the marginal cost of $40. If the marginal benefit for the 4th hour is at least $40 and the 5th hour is less than $40, then 4 hours is the optimal choice.

Figure 2.4 -Joe Runs a Business and Needs to Decide How Many