Question

Refer to the table. Which of the following amounts of time doing laundry would maximize net benefit?

Hours spent doing laundry	0	1	2	3	4	5
Total benefit	0	15	20	25	(a)	28
Marginal benefit	0	15	5	5	5	(b)
Total cost	0	2	5	(c)	14	(d)
Marginal cost	0	2	3	4	(e)	6

Group of answer choices

1 hour

5 hours

2 hours

3 hours

Answer 1

Option (D).

When hours = 4, Total benefit = 25 + 5 = 30 (value of a)

When hours = 3, Total cost = 5 + 4 = 9 (value of c)

When hours = 4, Marginal cost = Change in TC / Change in hours = (14 - 9) / (4 - 3) = 5/1 = 5 (value of e)

When hours = 4, Total cost = 14 + 5 = 19 (value of d)

Net benefit (NB) = Total benefit (TB) - Total cost (TC)

Hours	TB	TC	NB
0	0	0	0
1	15	2	13
2	20	5	15
3	25	9	16
4	30	14	16
5	28	19	9

Net benefit is maximized when hours = 3 and 4.