Table 2.2
-Julianne runs a business and needs to decide how many hours to stay open. Table 2.2 illustrates her marginal costs of staying open for each additional hour. Suppose that Julianne's marginal benefit of staying open per hour is $16. If she is following the marginal principle, how many hours should Julianne stay open?
A) 3 hours
B) 5 hours
C) 4 hours
D) 7 hours

Question

Table 2.2
-Julianne runs a business and needs to decide how many hours to stay open. Table 2.2 illustrates her marginal costs of staying open for each additional hour. Suppose that Julianne's marginal benefit of staying open per hour is $16. If she is following the marginal principle, how many hours should Julianne stay open?
A) 3 hours 
B) 5 hours 
C) 4 hours 
D) 7 hours

Quizplus · Accepted Answer

According to the marginal principle, Julianne should stay open for as many hours as her marginal benefit equals her marginal cost. In this case, since her marginal benefit is $16 per hour, she should stay open for as many hours as her marginal cost is also $16 per hour. Looking at Table 2.2, we can see that Julianne's marginal cost is $12 for the first hour, $10 for the second hour, $8 for the third hour, $10 for the fourth hour, and $12 for the fifth hour. Therefore, she should stay open for four hours, when her marginal cost is equal to her marginal benefit of $16.

Table 2.2 -Julianne Runs a Business and Needs to Decide How Many