Question

Pauli's Pizza offers one slice for $2, two slices for $3.50, three slices for $4.50, and four slices for $5.00. Sal orders two slices. From this we know that Sal's marginal benefit from the second slice must be at least _____ and the marginal benefit from the third slice must be less than _______.

A) $3.50; $4.50
B) $3.50; $1.00
C) $1.50; $1.00
D) $1.50; $4.50

Answer 1

The correct option is C,$1.50 and $1.00

Step-by-step explanation:

The marginal benefit of the second slice must be at least the extra amount paid to purchase the second slice ,which is the difference between the amount paid for 2 slices minus the amount paid for 1 slice i.e$1.50($3.50-$2.00).

The marginal benefit of the third slice must be at least the extra amount paid to purchase the third slice ,which is the difference between the amount paid for 3 slices minus the amount paid for 2 slices i.e$1.00$4.50-$3.50).

Answer 2

C) $1.50; $1.00

Step-by-step explanation:

A rational consumer would continue consumption if marginal benefit is greater or equal to marginal cost. So , Sals marginal benefit must be at least equal to her marginal cost.

Cost of one pizza = $2

Cost of two pizzas = $3.50

Marginal Cost of second pizza = $3.50 - $2 = $1.50

Cost of three pizzas = $4.50

Marginal Cost of second pizza = $4.50 - $3.50 = $1

Her marginal benefit must be at least $1.50; $1.00

I hope my answer helps you