Table 2.2

-Krystal runs a nail salon 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 Krystal's marginal benefit of staying open per hour is $30. If she is following the marginal principle, how many hours should Krystal stay open?
A) 4 hours
B) 5 hours
C) 6 hours
D) 7 hours

Question

Table 2.2
 
-Krystal runs a nail salon 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 Krystal's marginal benefit of staying open per hour is $30. If she is following the marginal principle, how many hours should Krystal stay open?
A) 4 hours 
B) 5 hours 
C) 6 hours 
D) 7 hours

Quizplus · Accepted Answer

According to the marginal principle, Krystal should continue to stay open as long as the marginal benefit (in this case, $30 per hour) is greater than or equal to the marginal cost. Looking at the table, we see that the marginal cost is $10 for the first hour, $15 for the second hour, $20 for the third hour, $25 for the fourth hour, $30 for the fifth hour, and $35 for the sixth hour. Therefore, the only hour where the marginal benefit ($30) is greater than the marginal cost is for the fifth hour, so Krystal should stay open for 5 hours.

Table 2.2 -Krystal Runs a Nail Salon and Needs to Decide How