Table 1-3

Santiago runs a comic book store in the town of East Arbor. He is debating whether he should extend his hours of operation. Santiago figures that his sales revenue will depend on the number of extra hours the store is open as shown in the table above. He would have to hire a worker for those extra hours at a wage rate of $18 per hour.
-Refer to Table 1-3.What is Santiago's marginal benefit if he decides to stay open for an extra two hours instead of one hour?
A)$40
B)$50
C)$120
D)$190

Question

Table 1-3
  
Santiago runs a comic book store in the town of East Arbor. He is debating whether he should extend his hours of operation. Santiago figures that his sales revenue will depend on the number of extra hours the store is open as shown in the table above. He would have to hire a worker for those extra hours at a wage rate of $18 per hour.
-Refer to Table 1-3.What is Santiago's marginal benefit if he decides to stay open for an extra two hours instead of one hour?
A)$40 
B)$50 
C)$120 
D)$190

Quizplus · Accepted Answer

To calculate the marginal benefit, we need to find the additional revenue that Santiago will earn by staying open for an extra hour. 
If he stays open for one extra hour, he will earn an additional revenue of $90 - $70 = $20. 
If he stays open for two extra hours, he will earn an additional revenue of $110 - $90 = $20. 
Therefore, the marginal benefit of staying open for an extra two hours instead of one hour is $20. 
Since the cost of hiring a worker for one hour is $18, it would not be profitable to stay open for an extra hour (marginal cost exceeds marginal benefit). 
However, it would be profitable to stay open for an extra two hours, as the additional revenue of $20 exceeds the cost of hiring a worker for two hours ($36). 
Therefore, the best choice for Santiago would be to extend his hours of operation by two hours.

Table 1-3 Santiago Runs a Comic Book Store in the Town of Store