Question

Suppose the corrupt economics professor was caught by the University excepting a bribe for $100 from a student and was fired from their hundred thousand dollar per year job then we can say that from the professor's point of view their MB < MC

Answer 1

                                    Marginal benefit is defined as the maximum amount that a customer is willing to pay for an additional good or service. Thus, it can be also defined as the additional satisfaction that a consumer would receive when an additional good or service is being purchased. The marginal cost is defined as the cost incurred in the addition of a product or service.

                                    In the given case, it is said that the professor was caught by the University for accepting a bribe of $100 from a student due to which the professor was fired from the job which was helping him earn a hundred thousand dollar per year job. On the analysis of the given case, it is understood that the professor may have accepted similar bribes earlier also which would have brought him additional revenue over the years. But as it is understood, the bribe value is very low when compared to the salary that is being accepted by the professor. Thus, in economic point of view from the professor’s side, the act would bring his marginal cost to be greater than the marginal revenue which would bring losses to the professor

                                    Thus, with the given case, it is also expected that the earlier bribes of the professor would be under review which would bring him more losses than the current loss in the form of marginal cost incurred. Thus, we can say that in this case, MC>MR and hence would result in a loss making process from the professor’s point of view.