Chapter 10. Marginal Analysis

Pre-Test Question:

Math and Graphing Review

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You must read each slide, and complete any questions on the slide, in sequence.

Question

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Correct! The first two cups each provide more additional benefit than the additional cost.

Sorry, the correct answer is two cups. The first cup provides more additional benefit than cost ($4.00 vs. $2.50). The second cup also provides more additional benefit than cost ($3.00 vs. $2.50). The third cup provides less additional benefit than cost ($2.00 vs. $2.50). Therefore, you would buy the first two but not the third.

Video

Post-Test Questions:

Question 10.1

Suppose Dave is at an all-you-can-eat buffet and he’s already paid for the price of the meal. The table below shows the total benefit he gets from eating various numbers of plates of food.

Plates of food eaten	Total Benefit
One	$10
Two	$15
Three	$18
Four	$17

Table

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Correct! Dave will eat three plates of food.

Sorry, Dave will eat three plates of food. Dave will continue to eat additional plates of food as long as each additional plate increases his total benefit. His total benefit increases for the first three plates but goes down for the fourth, so he will eat only three plates.

Question 10.2

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Correct! Jane will watch two TV shows.

Sorry, Jane will watch two TV shows. The first show gives her $10 of benefit while she loses only $5 from skipping her math homework. The second gives her $10 of benefit for only $8 from skipping her economics homework. She values her biology homework too much ($12) to skip it and watch a show.

Question 10.3

The table below shows the marginal benefit and marginal cost of each slice of pie John eats:

Slices of pie eaten	Marginal Benefit	Marginal Cost
One	$3.00	$1.50
Two	2.00	1.50
Three	1.00	1.50
Four	0.00	1.50

Table

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Correct! The marginal cost of each of the first two slices is lower than the marginal benefit. The marginal cost of the third slice of pie is higher than the marginal benefit.

Sorry, the correct answer is two slices. The marginal cost of each of the first two slices is higher than the marginal benefit. The marginal cost of the third slice of pie is higher than the marginal benefit.

Question 10.4

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Correct! Dave should make two paintings.

Sorry, Dave should make two paintings. The first two give him more benefit than his $75 in costs. The third only gives him $50 in benefit and is not worth spending his time on.

Question 10.5

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Correct! Marginal analysis compares the marginal cost and marginal benefit of each one choice at a time in order to analyze “how much” type questions.

Sorry, the correct answer is the marginal benefit. Marginal analysis compares the marginal cost and marginal benefit of each one choice at a time in order to analyze “how much” type questions.