Question

Neal is a coffee drinker. At the local coffee shop, the price

Answer 1

Answer and Step-by-step explanation: Marginal Benefit is the maximum a person is willing to pay for an additional good or service. It can be calculated as:

$marginal=\frac{Change total benefit}{Change quantity}$

For each cup of coffee:

For the first cup, benefit is $8;

For the second:

$marginal=\frac{14-8}{2-1}$

marginal = 6

For the third:

$marginal=\frac{18-14}{3-2}$

marginal = 4

For the fourth:

$marginal=\frac{20-18}{4-3}$

marginal = 2

For the fifth:

$marginal=\frac{21-20}{5-4}$

marginal = 1

The cost of the coffe is $3, so comparing benefit and cost, Neal should consume 4 cups of cofee per day.