Question

A restaurant offers an "all you can eat" lunch buffet for $12. Jim has eaten three servings and is trying to decide whether or not to go back for a fourth. The economic way of thinking suggests that Jim should go backfor the fourth serving if and only if:_______
a. his marginal benefit of the additional serving is greater than zero.
b. his marginal benefit of the additional serving is at least $3.
c. his marginal benefit of the additional serving is $12 or more.
d. his total value from the meal exceeds $12.

Answer 1

Answer:

b. his marginal benefit of the additional serving is at least $3.

Explanation:

In economic thinking, a firm or an individual will make profits as long as marginal revenue exceeds marginal costs.  Losses occur when marginal cost is more than the marginal revenue.

For Jim to breakeven at the restaurant, he has to consume meals worth at least $12.  If Jim is consuming servings that are of equal value,  four servings of $3, each will add up to $12. For Jim to consider a fourth serving, then it must be worth at least $ 3. Should be meal exceed $ 3 and assuming the first three meals were of equal value, Jim will have benefited from the offer.