From the table below, choose the optimum option using marginal ...

[leilurhhh]

From the table below, choose the optimum option using marginal analysis.
 
  Option Total Cost ()
  1 150
  2 100
  3 80
  4 70
  5 90
  6 120

Question 2

According to the text, because people in an urban-industrial society will always disagree to some extent about who ought to have which rights,
 
  A) it is unreasonable to expect negative externalities to be completely eliminated.
  B) negative externalities cannot be reduced without government coercion.
  C) negative externalities should not be thought of as the consequence of disagreement over property rights.
  D) there is no point in discussing the matter.
  E) we must depend upon government to decide exactly what should be prohibited or commanded.

[pami445]

Answer to Question 1

To arrive at an optimum decision using marginal analysis, marginal total costs are to be estimated. This is done in the following table.

Option Total Cost () Marginal Total Cost ()
1 150 -
2 100 -50
3 80 -20
4 70 -10
5 90 20
6 120 30

Option 4 is the optimum option in this case. This is because it is the only option that moving toward makes the decision maker better off and moving away from it makes the decision maker worse off. In other words, according to the Principal of Optimization at the Margin, Option 4 is the optimum choice.

Answer to Question 2

A