The Figure Above Shows the Marginal Benefit of Additional Minutes

question 195

Multiple Choice

The figure above shows the marginal benefit of additional minutes in a cell-phone plan.The marginal cost is constant at $0.10 per minute.
-It is optimal to buy more cell-phone time as long as

• A) marginal benefit exceeds marginal cost.
• B) marginal cost exceeds marginal benefit.
• C) average benefit exceeds average cost.
• D) average cost exceeds average benefit.
• E) marginal benefit exceeds zero.

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Definitions:

Salvage Value

An estimated resale value of an asset at the end of its useful life.

Profitability

The measure of a business's ability to generate earnings compared to its expenses and costs, determining its financial success and viability.

Production Cost

The total expense incurred in the manufacturing of a product, including raw materials, labor, and overhead costs.

Postponement

A supply chain strategy that delays the final assembly or customization of a product until the latest possible time to reduce inventory costs and improve customization.