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The Following Table Shows the Relationship Between the Speed of a Computer's

Question 88

Multiple Choice

The following table shows the relationship between the speed of a computer's CPU and the benefits and costs. Assume that all other features of the computer are the same, i.e., CPU speed is the only source of variation.  CPU Mhz  Total Benefit  Marginal Benefit  Total Cost  Marginal Cost 600$1,000$900700$1,500$100800$400$1,400900$2,200$1,9001,000$2,400$600\begin{array} { | l | l | l | l | l | } \hline \text { CPU Mhz } & \text { Total Benefit } & \text { Marginal Benefit } & \text { Total Cost } & \text { Marginal Cost } \\\hline 600 & \$ 1,000 & & \$ 900 & \\\hline 700 & \$ 1,500 & & & \$ 100 \\\hline 800 & & \$ 400 & \$ 1,400 & \\\hline 900 & \$ 2,200 & & \$ 1,900 & \\\hline 1,000 & \$ 2,400 & & & \$ 600 \\\hline\end{array} Application of the cost-benefit principle would lead one to purchase a __________ computer because __________.


A) 900 Mhz; the total benefit exceeds the total cost
B) 700 Mhz; the marginal benefit is $500 and the marginal cost is $100
C) 600 Mhz; it is certainly fast enough
D) 800 Mhz; the marginal benefits and marginal costs are equal

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