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

question 90

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. $$\begin{array} { | l | l | l | l | l | } \hline \text { CPU Mhz } & \text { Total Benefit } & \text { Marginal Benefit } & \text { Total Cost } & \text { Marginal Cost } \\\hline 600 & \$ 1,000 & & \$ 900 & \\\hline 700 & \$ 1,500 & & & \$ 100 \\\hline 800 & & \$ 400 & \$ 1,400 & \\\hline 900 & \$ 2,200 & & \$ 1,900 & \\\hline 1,000 & \$ 2,400 & & & \$ 600 \\\hline\end{array}$$
Application of the cost-benefit principle would lead one to purchase a __________ computer because __________.

• A) 900 Mhz;the total benefit exceeds the total cost
• B) 700 Mhz;the marginal benefit is $500 and the marginal cost is $100
• C) 600 Mhz;it is certainly fast enough
• D) 800 Mhz;the marginal benefits and marginal costs are equal

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Definitions:

Positive Output

The result of production processes that lead to an increase in the quantity of goods or services produced.

Long-Run Total Cost

The cumulative expense incurred by a firm when all inputs are variable, intended to capture the idea of planning and adjustment in the face of changing economic landscapes.

Maximize Profits

A business objective aiming to achieve the highest possible financial gain by managing costs and optimizing revenue streams in a given market environment.

Long-Run Cost Function

A graphical or mathematical representation showing the lowest cost at which a firm can produce any given level of output in the long run, where all inputs are variable.