Question

Exercise 1. You are about to sign-up for a movie streaming service and are trying to decide how many movies you should subscribe to. Each movie you stream costs $4.00. How many movies should you watch based on the table below, which represents the marginal benefits of streaming a certain amount of movies? Movies Streamed Marginal Benefit au AWN $7.00 $5.50 $4.50 $3.50 $2.00 $1.50

Answer 1

The optimal consumption will occur where Marginal benefit of a movie is greater than or = marginal cost

Marginal cost = $4

So, the number of movies you would consume = 3