Scenario: Assume that there are five apartments located at differentdistances from an individual's place of work-very close, close, far, veryfar, and extremely far. The individual makes his choice by studying thechange in costs as he moves farther from his place of work. He has tochoose between renting one of the five apartments. The movement fromapartment Very Close to Close has a marginal cost of -$60, a movementfrom apartment Close to Far has a marginal cost of $40, a movementfrom apartment Far to Very Far has a marginal cost of -$10, and amovement from apartment Very Far to Extremely Far has a marginal costof $20.Refer to the scenario above. Which of the following is used to arrive atthe optimum decision in the scenario?Total net benefit approachPrinciple of Optimization at the MarginBefore and after comparisonsOptimization using total value The following figure shows an individual's total cost of renting fourapartments located at different distances from her place of work.Costs ($)110010009008007006005004003002001000Apartment 1Apartment 3Apartment 2Apartment 1Apartment 4Apartment 2Apartment 3Apartment 4Refer to the figure above. Which apartment is the best feasible choice forthe individual?Cost CurveApartments

There are 5 apartments to choose from .Based on their location they are as follows-1 ) Very Close…

Scenario: Assume that there are five apartments located at different distances from an individual's place of work-very close, close, far, very far, and extremely far. The individual makes his choice by studying the change in costs as he moves farther from his place of work. He has to choose between renting one of the five apartments. The movement from apartment Very Close to Close has a marginal cost of -$60, a movement from apartment Close to Far has a marginal cost of -$40, a movement from apartment Far to Very Far has a marginal cost of -$10, and a movement from apartment Very Far to Extremely Far has a marginal cost of $20.

Scenario: Assume that there are five apartments located at different distances from an individual's place of work-very close, close, far, very far, and extremely far. The individual makes his choice by studying the change in costs as he moves farther from his place of work. He has to choose between renting one of the five apartments. The movement from apartment Very Close to Close has a marginal cost of -$60, a movement from apartment Close to Far has a marginal cost of -$40, a movement from apartment Far to Very Far has a marginal cost of -$10, and a movement from apartment Very Far to Extremely Far has a marginal cost of $20.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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