The Following Table Shows the Relationship Between the Speed of a Computer's

question 75

Multiple Choice

The following table shows the relationship between the speed of a computer's CPU and the benefits and costs. Assume that all other features of the computer are the same, i.e., CPU speed is the only source of variation. $$\begin{array} { | l | l | l | l | l | } \hline \text { CPU Mhz } & \text { Total Benefit } & \text { Marginal Benefit } & \text { Total Cost } & \text { Marginal Cost } \\\hline 600 & \$ 1,000 & & \$ 900 & \\\hline 700 & \$ 1,500 & & & \$ 100 \\\hline 800 & & \$ 400 & \$ 1,400 & \\\hline 900 & \$ 2,200 & & \$ 1,900 & \\\hline 1,000 & \$ 2,400 & & & \$ 600 \\\hline\end{array}$$ Choosing the 1,000 Mhz computer would be inefficient because:

• A) the marginal benefit is less than the marginal cost.
• B) the marginal benefit is equal to the marginal cost.
• C) it is impossible to tell the difference compared to a 600 Mhz computer.
• D) the marginal benefit is more than the marginal cost.

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