Table 1-2

Thuy Anh runs a small flower shop in the town of Florabunda. She is debating whether she should extend her hours of operation. Thuy Anh figures that her sales revenue will depend on the number of extra hours the flower shop is open as shown in the table above. She would have to hire a worker for those extra hours at a wage rate of $16 per hour.
-Refer to Table 1-2.What is Thuy Anh's marginal benefit if she decides to stay open for an extra three hours instead of two hours?
A)$0
B)$20
C)$25
D)$45
E)$70

Question

Table 1-2
  
Thuy Anh runs a small flower shop in the town of Florabunda. She is debating whether she should extend her hours of operation. Thuy Anh figures that her sales revenue will depend on the number of extra hours the flower shop is open as shown in the table above. She would have to hire a worker for those extra hours at a wage rate of $16 per hour.
-Refer to Table 1-2.What is Thuy Anh's marginal benefit if she decides to stay open for an extra three hours instead of two hours?
A)$0 
B)$20 
C)$25 
D)$45 
E)$70

Quizplus · Accepted Answer

To determine Thuy Anh's marginal benefit, we need to calculate the additional revenue she would earn by staying open an extra hour and then subtract the cost of the additional labor.

Going from two extra hours to three extra hours, we can see from the table that Thuy Anh would earn an additional $25 in revenue (the difference between $140 and $115). However, she would also have to pay the extra worker for an additional hour at a cost of $16.

Therefore, Thuy Anh's marginal benefit for staying open an extra three hours instead of two hours is:

Marginal benefit = Additional revenue - Additional cost
Marginal benefit = $25 - $16
Marginal benefit = $9

Since the marginal benefit is positive, Thuy Anh should stay open for the extra hour.

Table 1-2 Thuy Anh Runs a Small Flower Shop in the Town