You want to sell your old iPad to your cousin, who wants to give you $300 for it. You will have to pay $40 to ship the iPad to your cousin. As a rational decision maker, you should:
A) sell it because the marginal benefit is smaller than the marginal cost.
B) not sell it because the marginal benefit is smaller than the marginal cost.
C) sell it because the marginal benefit is greater than the marginal cost.
D) not sell it because the marginal benefit is greater than the marginal cost.
E) sell it because the marginal benefit is equal to the marginal cost.

Question

Quizplus · Accepted Answer

To make a rational decision, we need to compare the marginal benefit and marginal cost. In this case, the marginal benefit of selling the iPad is $300, while the marginal cost is $40 for shipping. Therefore, the total benefit will be $260 ($300 - $40). As the marginal benefit is greater than the marginal cost, it is rational to sell the old iPad to your cousin. Hence, the best choice is C, which is to sell it because the marginal benefit is greater than the marginal cost.

You Want to Sell Your Old IPad to Your Cousin