Suppose you could quantify the amount of satisfaction you receive from consuming ice cream in money terms. You might say, "I expect to get $3 worth of satisfaction from this ice cream cone." According to traditional economic theory, if the price of this ice cream cone were $3.25, would you buy one?
A)Ye, since the marginal benefit from consuming the ice cream cone is greater than the marginal cost.
B)Yes, since the marginal cost of consuming the ice cream cone is greater than the marginal benefit.
C)No, since the marginal cost of consuming the ice cream cone is greater than the marginal benefit.
D)No, since the marginal benefit from consuming the ice cream cone is greater than the marginal cost.

Question

Quizplus · Accepted Answer

Traditional economic theory suggests that a rational consumer will make a purchase if the marginal benefit (the satisfaction or utility derived from consuming a good) exceeds the marginal cost (the price of the good). In this scenario, the marginal benefit ($3 worth of satisfaction) is less than the marginal cost ($3.25 for the ice cream cone), so according to traditional economic theory, you would not buy the ice cream cone.

Suppose You Could Quantify the Amount of Satisfaction You Receive