Question

The price of each ride at the fair is $7 . Your benefit associated with each ride decreases with each ride because you start to get dizzy. How many rides should you go on if your marginal benefit for each ride is as follows- first ride: $25 , second ride: $18 , third ride: $11 , fourth ride: $4 , fifth ride: $0 ?

Answer 1

The student should go on the first three rides at the fair since the marginal benefit from each of those rides exceeds the cost of $7 per ride.

Step-by-step explanation:

The student's question revolves around the concept of marginal benefit and how to optimize the number of rides at the fair given the decreasing marginal benefit and a constant cost per ride. To determine the optimal number of rides, one should compare the marginal benefit of each ride to the cost per ride. The marginal benefit should be greater than or equal to the cost of the ride to justify going on it.

Given the ride's cost is $7, the student should go on rides as long as the marginal benefit equals or exceeds this price. Here, the first three rides have a marginal benefit greater than $7 (first ride: $25, second ride: $18, third ride: $11), while the fourth ride's marginal benefit is $4, and the fifth ride's benefit is $0, which are both below the price of the ride.

Therefore, the student should only go on the first