The seventh glass of soda that Tim consumes will produce an extra benefit of 10 cents and has an extra cost of zero (Tim is eating at the cafeteria). The cost-benefit principle predicts that Tim will:

A. realize he has had too much soda to drink and go home.

B. drink the seventh glass and continue until the marginal benefit of drinking another glass of soda is zero.

C. volunteer to empty out the fountain.

D. not drink the seventh glass.

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Guest

9 January, 18:59

The seventh glass of soda that Tim consumes will produce an extra benefit of 10 cents and has an extra cost of zero (Tim is eating at the cafeteria). The cost-benefit principle predicts that Tim will:

A. realize he has had too much soda to drink and go home.

B. drink the seventh glass and continue until the marginal benefit of drinking another glass of soda is zero.

C. volunteer to empty out the fountain.

D. not drink the seventh glass.

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Answers (1)

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Eliezer Webb · Answer 1

B. drink the seventh glass and continue until the marginal benefit of drinking another glass of soda is zero.

Explanation:

The consumer will drink soda until the benefit from consuming matches the cost of consuming.

In this case the cost is zero. So it will consume until the marginal benefit equalt zero.