P32 $39 $42 $37 $42 4 1 First calculate Caleb's marginal costs and benefits. Caleb will stop at the 4th unit because after that the MC is higher than the MB. It could be lower later but we don't have enough information. He won't stop at the first unit as he can do better by increasing his consumption from 2 to 3 and then to 4. We can see this by checking total benefits - total cost>0 at the 4th unit.
P32 $39 $42 $37 $42 4 1 First calculate Caleb's marginal costs and benefits. Caleb will stop at the 4th unit because after that the MC is higher than the MB. It could be lower later but we don't have enough information. He won't stop at the first unit as he can do better by increasing his consumption from 2 to 3 and then to 4. We can see this by checking total benefits - total cost>0 at the 4th unit.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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