Scenario: Assume that there are five apartments located at different distances from an individual's place of work-very close, close, far, very far, and extremely far. The individual makes his choice by studying the change in costs as he moves farther from his place of work. He has to choose between renting one of the five apartments. The movement from apartment Very Close to Close has a marginal cost of −$60, a movement from apartment Close to Far has a marginal cost of −$40, a movement from apartment Far to Very Far has a marginal cost of −$10, and a movement from apartment Very Far to Extremely Far has a marginal cost of $20.
-Refer to the scenario above.Which of the following shifts will increase the total cost?
A) A shift from apartment Close to apartment Far
B) A shift from apartment Far to apartment Very Far
C) A shift from apartment Very Close to apartment Close
D) A shift from apartment Very Far to apartment Extremely Far

Question

Quizplus · Accepted Answer

Moving from Very Far to Extremely Far has a marginal cost of $20, which means the total cost of renting the apartment will increase. All other options have a negative marginal cost, which means the total cost will decrease. Therefore, the best choice is to stay in the current apartment (if it is not already Extremely Far) or move to an apartment that is closer to the workplace than the current apartment.

Scenario: Assume That There Are Five Apartments Located at Different