At a price of $3.00, if a consumer is willing to buy 4 cups of tea per week. More precisely, what does this mean?

Question

BlackTom AI · Accepted Answer

To interpret the statement, we connect the price, quantity, and the concept of marginal benefit in consumer choice theory.
Option 1: The marginal benefit of consuming the fourth cup is $3.00. This aligns with the idea that a consumer is willing to pay up to the price for the additional unit, so the marginal benefit (the value the consumer places on the fourth cup) equals the price, here $3.00.
Option 2: The total cost of consuming four cups is $3.00. This would only be true if the price applied to all four cups in a lump sum, which contradicts the idea of marginal analysis where each cup has a price, and total cost would be 4 × $3.00 = $12.00, not $3.00.
Option 3: Marginal benefit equals marginal cost when four cups are consumed. In standard optimization, a consumer equates marginal benefit to marginal cost to maximize utility, but here the given information specifies willingness to buy at the price, which directly relates MB to price. Saying MB = MC here is conflating willingness to pay with marginal cost unless MC is defined as price; without that, this statement is incomplete and not the direct interpretation.
Option 4: The marginal cost of producing the fourth cup is $3.00. This question describes a consumer’s willingness to buy, not a producer’s cost. Marginal cost to the producer is not given and, in standard microeconomics, the consumer’s willingness-to-pay relates to marginal benefit, not to the producer’s marginal cost.

At a price of $3.00, if a consumer is willing to buy 4 cups of tea per week. More precisely, what does this mean?

View Explanation

Log in for full answers

Similar Questions

What is the shape of the marginal benefit curve for pollution reduction?

A consumer’s marginal benefit curve (MB) for a good is represented by MB = 180–3q. What is the MB of unit number 25 of the good consumed?

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events could prompt you to reverse this decision?

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events could prompt you to reverse this decision?

The marginal benefit of a slice of pizza is the:

The marginal benefit of a slice of pizza is the:

What is the change in the total benefit when one more unit is made?

Marginal benefit is the benefit that a person receives from consuming

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler