The Logic of Maximizing Behavior and Maximizing in the Marketplace

The Logic of Maximizing Behavior

ANSWER TO TRY IT! PROBLEM

Here are the completed data table and the table showing total and marginal benefit and cost.

Image answer

Ms. Phan maximizes her net benefit by reducing her time studying economics to 2 hours. The change in her expectations reduced the benefit and increased the cost of studying economics. The completed graph of marginal benefit and marginal cost is at the far left. Notice that answering the question using the marginal decision rule gives the same answer.