In the following examples state how you would use theprinciple of marginal analy

Question

In the following examples state how you would use theprinciple of marginal analysis to make a decision. a. Deciding how many days to wait before doing yourlaundry b. Deciding how much library research to do before writingyour term paper c. Deciding how many bags of chips to eat d. Deciding how many lectures of a class to skip In the following examples state how you would use theprinciple of marginal analysis to make a decision. a. Deciding how many days to wait before doing yourlaundry b. Deciding how much library research to do before writingyour term paper c. Deciding how many bags of chips to eat d. Deciding how many lectures of a class to skip

Explanation / Answer

b) Doing library research has a marginal benefit and marginalcost, the benefit is extra information and deeper understanding ofthe topic to write the paper, while the cost of the research islost time in actually writing the paper. If your research is notsufficient enough to write a cohesive paper then you will choose todo more research, in essence the MB of research is greater than theMC of performing the task. The opposite would be true if you hadenough research, at which point the MC would be greater than the MBand it would be more beneficial to write the paper.
c) The MB of eating an extra bag of chips is the utility orsatisfaction gained from eating the bag of chips, while the MC isthe cost of an additional bag of chips. If an additional bag ofchips gave you satisfaction beyond the cost of that bag then youwould be gaining value marginally (MB-MC> 0), therefore makingthis the best decision. However, if the MC of the next bag of chipswas greater than the satisfaction of eating it, then you would losevalue marginally (MB-MC< 0).
d) The marginal value of skipping a lecture is the leisuretime gained during the period of that lecture, however, the MC isthe loss of information for the final during the lecture skipped.If your value of leisure time is greater than the value of theinformation lost (MB> MC) for the following lecture, then youwould benefit from skipping it. However, if you had already skippedmany lectures and the cost of missing the next lecture was higherthan the benefit of leisure time (MC>MB), then you would losevalue marginally if you skipped that lecture.

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