Asked by Desiree Hunter on Apr 25, 2024

verifed

Verified

You should decide to go to a movie:

A) if the marginal cost of the movie exceeds its marginal benefit.
B) if the marginal benefit of the movie exceeds its marginal cost.
C) if your income will allow you to buy a ticket.
D) because movies are enjoyable.

Marginal Benefit

The additional pleasure or utility gained when one more unit of a good or service is consumed.

Marginal Cost

The additional cost incurred to produce one more unit of a good or service.

  • Acquire knowledge of marginal analysis and its implementation in making decisions.
  • Appreciate the criticality of juxtaposing marginal benefits with marginal costs.
verifed

Verified Answer

KA
Khaled Albukhari7 days ago
Final Answer :
B
Explanation :
According to the basic principle of rational decision making, one should choose an option (in this case, whether to go to a movie or not) only if its marginal benefit exceeds its marginal cost. Marginal Benefit (MB) would include the pleasure/enjoyment derived from watching the movie, while Marginal Cost (MC) would include the price of the ticket, the time and effort taken to reach the theater, and any other opportunity cost involved. Therefore, if the MB > MC, it is rational to go to the movie. Conversely, if MC > MB, it would be rational to not go to the movie. Choice A is incorrect since if MC > MB, it would not be rational to go to the movie, even if the marginal cost is not beyond one's income. Choice C is irrelevant as it does not address the issue of rational decision making. Choice D is subjective and varies from person to person - what might be enjoyable to one person, may not be enjoyable to another.