Warren drinks four cups of coffee during a particular day.The marginal benefit he enjoys from drinking the fourth cup
A)can be thought of as the total benefit Warren enjoys by drinking four cups minus the total benefit he would have enjoyed by drinking just three cups.
B)determines Warren's willingness to pay for the fourth cup.
C)is likely different from the marginal benefit provided to Warren by the third cup.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

A) is correct because marginal benefit is the additional benefit received from consuming one additional unit of a good or service, and can be calculated by subtracting the total benefit of the previous amount consumed from the total benefit of the current amount consumed.
B) is correct because Warren's willingness to pay for the fourth cup will be influenced by the additional satisfaction he receives from consuming it, which is the marginal benefit.
C) is correct because the marginal benefit of each unit consumed will likely decrease as more units are consumed, due to the law of diminishing marginal utility. Therefore, the marginal benefit of the fourth cup may be lower than the marginal benefit of the third cup.

Warren Drinks Four Cups of Coffee During a Particular Day