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At the birthday party of your best friend, you see Skylar help himself to a second piece of cake
At the birthday party of your best friend, you see Skylar help himself to a second piece of cake.
For this individual, it must be the case that:
A. the marginal benefit of the second piece of cake is less than the marginal cost.
B. the total benefit received from eating cake is falling.
C. the ratio of marginal benefit over marginal cost is less than one.
D. the marginal benefit of the second piece of cake is greater than the marginal cost.
E. Skylar is irrationally consuming too much cake.
Expert Solution
At the birthday party of your best friend, you see Skylar help himself to a second piece of cake. (D) the marginal benefit of the second piece of cake is greater than the marginal cost. For any unit of a good or service, if the marginal benefit is greater than the marginal cost, the individual will consume that unit because their net benefit of the consumption of that unit will be positive. Therefore, if Skylar consumed the second piece, then it must have been the case that the benefit of the second piece (marginal benefit) was greater than the cost of the second unit (marginal cost).
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