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 2 hours per day. If she is following the marginal principle, what must her marginal benefit be?
A) $12
B) $20
C) $8
D) $22

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 2 hours per day. If she is following the marginal principle, what must her marginal benefit be?
A) $12 
B) $20 
C) $8 
D) $22

Quizplus · Accepted Answer

According to the marginal principle, Julianne should stay open for an additional hour if the marginal benefit (the additional revenue generated by staying open) is greater than or equal to the marginal cost (the cost of staying open for an additional hour). The marginal cost of staying open for the third hour is $8, so Julianne should stay open for the additional hour if her marginal benefit is greater than or equal to $8. Since she is only staying open for two hours, her additional revenue is at least $16 ($8/hour), so her marginal benefit must be at least $8/hour. Therefore, the correct answer is C, $8.

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