The Benefits of Studying Economics

The Benefits of Studying Economics

Economics
Question:
Review the Markets, Maximizers, and Efficiency section of the Economics Principles PDF in this week’s Lessons. Pg. 209-250 Answer the following questions. What is achieved by selecting the quantity of an activity at which marginal benefit equals marginal cost? Suppose the marginal benefit of an activity exceeds the marginal cost. What does the marginal decision rule say a maximizing decision maker will do? Click here to view the Hours Studying Graph Use the graph linked above to answer the following questions. Fill in the fourth row for net benefit in the table. Use the midpoint convention to emphasize that the net benefit is a marginal value showing the gain as hours spent increase by one-hour increments. Using a graph similar to Panel (a) of Figure 6.1 “The Benefits of Studying Economics” show the marginal benefit curve and verify that the area under the curve at 3 hours of study corresponds to the total benefit of that much study. (Hint: Remember that marginal values are plotted at the midpoints of the corresponding intervals on the horizontal axis.) Use a graph similar to Panel (b) of Figure 6.1 “The Benefits of Studying Economics” to show the marginal cost curve and verify that the area under the curve at 3 hours of study corresponds to the total cost of that much study. Use a graph similar to Panel (a) of Figure 6.6 “Using Marginal Benefit and Marginal Cost Curves to Determine Net Benefit” to combine the marginal benefit and marginal cost curves you drew in parts (a) and (b). Based on the marginal decision rule, how many hours should Joe spend studying for his biology exam?