The marginal benefits to Roberto of weekend vacations during the year at a local resort are given by the following schedule:
TABLE 1-2

-Refer to Table 1-2. If the marginal cost of a weekend vacation at the local resort is constant and equal to $350, how many weekends at the local resort is Roberto likely to enjoy?

Question

The marginal benefits to Roberto of weekend vacations during the year at a local resort are given by the following schedule:
TABLE 1-2
 
-Refer to Table 1-2. If the marginal cost of a weekend vacation at the local resort is constant and equal to $350, how many weekends at the local resort is Roberto likely to enjoy?

Quizplus · Accepted Answer

To determine how many weekends at the local resort Roberto is likely to enjoy, we need to compare the marginal benefits with the marginal cost. One way to do this is to calculate the net benefit for each additional weekend vacation, which is the difference between the marginal benefit and the marginal cost.

For example, the first weekend vacation provides a marginal benefit of $400, which is greater than the marginal cost of $350, so the net benefit is $50. The second weekend vacation provides a marginal benefit of $350, which is equal to the marginal cost, so the net benefit is zero. The third weekend vacation provides a marginal benefit of $300, which is less than the marginal cost, so the net benefit is negative $50.

Therefore, based on this analysis, Roberto is likely to enjoy two weekend vacations, with a possible third one if he values it more than the negative net benefit of $50. Hence, the best choice is B) 3, as it accounts for the possibility that Roberto may still choose to take one more weekend vacation despite the negative net benefit.

The Marginal Benefits to Roberto of Weekend Vacations During the Year