Question

Several years ago, a bookstore chain extended its closing time from 9 p.m. to 10 p.m. Now it is considering a further extension to 11 p.m. In making this marginal decision, the results of having gone from 9 p.m. to 10 p.m. are:______.

a) no longer relevant to the current decision.
b) relevant if the marginal costs and benefits were unequal.
c) relevant since they are part of the calculation of total costs and benefits.
d) relevant if the marginal costs and benefits were equal.

Answer 1

Several years ago, a bookstore chain extended its closing time from 9 p.m. to 10 p.m. Now it is considering a further extension to 11 p.m. In making this marginal decision, the results of having gone from 9 p.m. to 10 p.m. are no longer relevant to the current decision.

Step-by-step explanation:

The marginal decision rules clearly state that even if the marginal benefit exceeds its marginal cost, the operation should be expanded.

The marginal benefit of this operation is that it is beneficial to invest a further $1 on the nice. The lowest cost is the reduction of benefits by investing $1 less on a second nice.

For example, it would cost several thousand pounds to flight an aircraft from London to New York. The cost of transporting one additional traveler, however, is very small, with a 50% complete flight.