The following table shows the total benefit from painting 0,1,2,3,or 4 rooms in a home.

-If the marginal cost is constant at $250,what is the optimal number of rooms to paint?
A) 0.
B) 1.
C) 2.
D) 3.
E) 4.

Question

The following table shows the total benefit from painting 0,1,2,3,or 4 rooms in a home.
 
-If the marginal cost is constant at $250,what is the optimal number of rooms to paint?
A) 0. 
B) 1. 
C) 2. 
D) 3. 
E) 4.

Quizplus · Accepted Answer

The optimal number of rooms to paint is where the marginal benefit equals the marginal cost. To find the marginal benefit, we can calculate the difference between total benefits for each consecutive number of rooms painted.

Marginal benefit of painting 1 room: 
$880 - $550 = $330

Marginal benefit of painting 2 rooms: 
$1,430 - $880 = $550

Marginal benefit of painting 3 rooms: 
$1,910 - $1,430 = $480

Marginal benefit of painting 4 rooms: 
$2,240 - $1,910 = $330

We can see that the marginal benefit decreases as more rooms are painted.

Since the marginal cost is constant at $250, the optimal number of rooms to paint is where the marginal benefit equals $250. This occurs when painting 3 rooms (where the marginal benefit is $480, as calculated above).

Therefore, the best choice is D, to paint 3 rooms.

The Following Table Shows the Total Benefit from Painting 0,1,2,3,or