The New York Times reports that cruise lines have been slashing prices and cruis

Question

The New York Times reports that cruise lines have been slashing prices and cruise sales are up. It says this surge of interest tells us that despite the uncertain economic climate, people clearly need more fun in their lives and view their vacations as a valuable and necessary part of it How would you make a rational choice about taking a cruise? To make a rational choice you would A. compare the marginal benefit from taking the cruise with the marginal cost of the cruise 0 B. consider the length of the cruise and the route it will take C. chose the ship with the most amenities regardless of the price of the cruise D. chose the cruise line with the cheapest price regardless of its amenities 0 E. check with the National Hurricane Center about weather onroute

Explanation / Answer

In the first question we will obviously been looking at the marginal cost and marginal benefit because this comparison is most pivotal in the consumer decision making. When people make choices they usually compare the additional benefit and additional cost of the decision in their life. This suggests that option A is correct.

Marginal external benefit is the additional benefit to that other people in the community enjoy when there is a transaction taking place between consumers and producers. Option d is correct

We realise that the marginal social benefit is greater than the Marshall private benefit and the difference is the marginal benefit. This is suggest that option A is correct.

For this path option E is correct. Note that $2,000 is the marginal external cost of one household so for the total cost of this externality, is $2,000 X number of homes.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.