Refer to Figure 6.3.Suppose the price of pizza is $8.50.Then the consumer will purchase _____ pizzas and the net benefit is ______.
A) 5; $9.50
B) 4; $8.00
C) 5; $3.50
D) 4; $9.50

Question

Refer to Figure 6.3.Suppose the price of pizza is $8.50.Then the consumer will purchase _____ pizzas and the net benefit is ______. 
A) 5; $9.50 
B) 4; $8.00 
C) 5; $3.50 
D) 4; $9.50

Quizplus · Accepted Answer

At the price of $8.50, the consumer will purchase 4 pizzas and the net benefit is $8.00. This is the point where the marginal benefit equals the marginal cost, which is the maximum satisfaction the consumer can obtain at this price level. Any price point above $8.50 will result in a net benefit lower than $8.00, while any price point below $8.50 will result in a net benefit lower than $8.00 because the marginal cost of purchasing an additional pizza is higher than its marginal benefit. Therefore, the best choice is to purchase 4 pizzas at $8.50 each.