Question

The construction estimator told the storage unit owner that building another section of storage units will likely add 100 more storage space renters to the bottom line. The rational storage business owner considered the rental prices of an additional 100 units, but he would decide to add more units if and only if __________.
a) The marginal benefit is greater than the marginal cost of additional units.b) demand for additional storage units from one more building (the marginal product) is risingc) the total benefits from all storage units are greater than the total cost of all storage units.

Answer 1

Answer:

The correct answer is letter "A": The marginal benefit is greater than the marginal cost of additional units.

Explanation:

The marginal benefit-cost is an analysis that companies make to determine what the benefit is of producing one more unit compared to the costs of producing that additional unit. If the marginal benefit is greater than the marginal cost, the production of the additional unit is reasonable. If the marginal cost is greater than the marginal benefit, companies are unlikely to go ahead with the production of the additional unit.

Answer 2

Answer:

a) The marginal benefit is greater than the marginal cost of additional units.

Explanation:

Cost-benefit analysis is the systematic process of wieghing various transactions based on comparism between their benefit and cost.

The rational storage business owner should compare the cost of building another section of storage units to the benefit from 100 renters.

If the additional cost is justified by the benefit then he can go ahead with the construction.