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 we observe Julianne staying open 5 hours per day. If she is following the marginal principle, what must her marginal benefit be?
A) $16
B) $10
C) $24
D) $20

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 we observe Julianne staying open 5 hours per day. If she is following the marginal principle, what must her marginal benefit be?
A) $16 
B) $10 
C) $24 
D) $20

Quizplus · Accepted Answer

If Julianne is following the marginal principle, she will stay open as long as the marginal benefit is equal to or greater than the marginal cost. Since she stays open for 5 hours, the marginal cost for the 5th hour must be equal to the marginal benefit. Therefore, her marginal benefit must be $20, which is the marginal cost for the 5th hour.

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