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.

-The marginal cost of upgrading from a 2 GHz to a 3 GHz computer is
A) $600.
B) $500.
C) $400.
D) $200.
E) $100.

Question

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.
 
-The marginal cost of upgrading from a 2 GHz to a 3 GHz computer is
A) $600. 
B) $500. 
C) $400. 
D) $200. 
E) $100.

Quizplus · Accepted Answer

The marginal cost of upgrading from a 2 GHz to a 3 GHz computer is the additional cost of upgrading divided by the additional benefit gained, which is (1200-800)/(3-2) = $400. 
Therefore, the best choice would be to upgrade to a 3 GHz computer as it provides the highest benefit-cost ratio.

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