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

question 101

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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Definitions:

Laissez-faire Policies

An economic policy of non-intervention where private parties are free from government restrictions, tariffs, and subsidies.

Classical Economists

Economists from the late 18th and early 19th centuries who believed in free markets, competition, and the self-regulating nature of economies.

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Business Expectations

Business expectations relate to the outlooks and forecasts that businesses have regarding future economic conditions, which can influence their strategic planning and operations.