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The marginal cost of a trip to the beach this weekend for Joe is $200
The marginal cost of a trip to the beach this weekend for Joe is $200. If Joe is rational he will make the trip if
a. the marginal benefit of the trip is positive.
b. the marginal benefit of the trip is greater than $200.
c. the marginal benefit of the trip is less than $200.
d. the marginal benefit of the trip is zero.
Expert Solution
b. the marginal benefit of the trip is greater than $200.
Reason: The marginal benefit is the additional benefit that the person receives when he consumes one extra unit of a good. The marginal cost on the other hand is the additional cost incurred in buying or producing one extra unit of a good. The marginal benefit from going to the beach must have exceeded the marginal cost of $200 for Joe, as he decides to go for a beach trip in the weekend. If the marginal benefit would have been less than $200, then Joe would have decided otherwise.
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