Question

queston 1 On “Taco Tuesday” a local Mexican restaurant offers gourmet tacos for $2 each. The following table describes the relationship between the number of tacos you eat per visit with your total cost and benefit.

Tacos	Total Benefit	Marginal Benefit	Total Cost	Marginal Cost
0	0	-	0	-
1	$6		$2
2	$10		$4
3	$13		$6
4	$15		$8
5	$16		$10

Fill in the blanks for marginal benefit and marginal cost in the above table. Please enter your answers as whole numbers with no decimal places (ie. 4 not 4.00 or "Four").

How many tacos should you eat?

Answer 1

*Marginal Benefit

Marginal benefit is addition made to the total benefit as consumption is increased by one more unit of the commodity.

Mathematically,

MBn=TBn-TBn-1.

Where,

TBn=Total Benefit of nth unit.

TBn-1=Total Benefit of n-1(preceding) unit.

Here n is the unit of tacos.

From the above table,

Example,

MB of 2nd unit=

Total Benefit of 2nd unit - Total Benefit of 1st

(n-1=2-1=1) unit.

MB 2nd unit=$10-$6=$4

*Marginal cost

Marginal cost is defined as addition made to total cost when one more unit of output is produced.

MCn=TCn-TCn-1

MC=Marginal cost, TC=Total Cost

Here n is the unit of tacos.

From the above table,

Example,

MC of 2nd unit=

Total cost of 2nd unit-Total cost of 1st (n-1=2-1=1) unit.

MC of 2nd unit=$4-$2=$2.

Hence marginal cost of 2nd unit is $2.

Question.How many tacos should you eat?

Answer.

The equilibrium level of output is attained,where maginal benefit (MB) is equal to the marginal cost (MC).

Hence, you should eat 4 units of tacos at which marginal benefit is equal to the marginal cost i.e.$2

MB=MC=$2