The seventh glass of soda that Tim consumes will produce an extra benefit of 10 cents and has an extra cost of zero (Tim is eating at the cafeteria). The cost-benefit principle predicts that Tim will:

Question

Quizplus · Accepted Answer

According to the cost-benefit principle, Tim will continue to drink the soda until the marginal benefit of drinking another glass is zero. Since the seventh glass has an extra benefit of 10 cents and no extra cost, it is likely that the marginal benefit is still positive, so Tim will choose to drink the seventh glass.

The Seventh Glass of Soda That Tim Consumes Will Produce