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.
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.