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Author Question: If the marginal total cost when moving from Option A to Option B is negative and the marginal total ... (Read 66 times)

amal

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on: Jun 29, 2018
If the marginal total cost when moving from Option A to Option B is negative and the marginal total cost when moving from Option B to A is positive, which of the two options is better? What is the underlying principal behind the decision?
 
  What will be an ideal response?

Question 2

In 2010 the family mean income of householders aged 15-24 years was approximately
 
  A) 11,000.
  B) 21,000.
  C) 31,000.
  D) 41,000.
  E) 51,000.


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kbennett34

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Reply #1 on: Jun 29, 2018
Answer to Question 1

A negative marginal total cost implies that the decision maker is gaining from the switch between options. A positive marginal cost implies that the decision maker is losing from the switch between options. In this case, moving to Option B makes the decision maker better off, while moving away from it makes the decision maker worse off. Hence, Option B is better of the two. The underlying principal behind this decision is referred to as the Principal of Optimization at the Margin.

Answer to Question 2

D


amal

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Reply 2 on: Jun 29, 2018
Excellent

aliotak

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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