Question

2 How Fast to Sail?

APPLYING THE CONCEPTS #2: How do people think at the margin?

(Essay)

Answer 1

The given question is about how fast to sail. We know that if the ship is sailing at a faster speed, more of the fuel would be consumed because of a simple reason that higher the speed , more would be the fuel consumption.

But a higher speed is good In the way that it leads to a quicker delivery of goods through ships or better means of transportation for people if it gives a higher speed.

Now this decision is how fast to sail would be dealt with using the economic method of measuring the costs and benefits.

The marginal cost from the increase in usage is fuel for a better speed should be considered and used to equate us to the marginal benefit. Marginal benefit in this case would be how a higher speed would mean more goods delivered and a the marginal increase ii revenue from this increase.

This is similar to what people think at margin ie how much more should be produced or consumed so that the marginals ar equal ie marginal revenue is equal to marginal cost.

(You can comment for doubts)