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 we observe Krystal staying open 2 hours per day. If she is following the marginal principle, what must her marginal benefit be?
A) $6
B) $12
C) $15
D) $18

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 we observe Krystal staying open 2 hours per day. If she is following the marginal principle, what must her marginal benefit be?
A) $6 
B) $12 
C) $15 
D) $18

Quizplus · Accepted Answer

If Krystal is following the marginal principle, she will stay open as long as the marginal benefit of staying open is greater than or equal to the marginal cost of staying open for an additional hour. Since we observe her staying open for 2 hours, the marginal cost of the second hour (which is the relevant marginal cost for deciding whether to stay open for that hour) must be equal to or less than the marginal benefit she receives from staying open for that hour. Without the specific numbers from Table 2.2, we can infer that the correct answer must be based on the principle that the marginal benefit equals the marginal cost at the optimal number of hours she decides to stay open. Given the choices, $12 is the correct answer, assuming it corresponds to the marginal cost of the second hour.

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