Homework Answers
|
Quantity (Hours per day) |
Total Benefit |
Total Cost |
Marginal Benefit= Change in TB/Change in Q |
Marginal Cost= Change in TC/Change in Q |
|
0 |
0 |
0 |
||
|
1 |
40 |
10 |
40 |
10 |
|
2 |
70 |
30 |
30 |
20 |
|
3 |
90 |
60 |
20 |
30 |
|
4 |
100 |
100 |
10 |
40 |
1. Marginal Benefit of 1 hour = 40 and Marginal Cost of 1 hour = 10
2. Yes, as the marginal benefit is greater than marginal cost
3. No. The efficient allocation is where marginal benefit equal to or greater than marginal cost and is at 2 hours per day
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