   Chapter 1, Problem 1WNG

Chapter
Section
Textbook Problem

Suppose the marginal costs of reading are constant and the marginal benefits of reading decline (over time). Initially, the marginal benefits of reading are greater than the marginal costs. Draw the marginal-benefit (MB) curve and marginal-cost (MC) curve of reading, and identify the efficient amount of reading. Next, explain why the efficient point is the point at which the net benefits of reading are maximized.

To determine

Marginal benefit curve and marginal cost curve.

Explanation

Figure 1 shows the marginal cost and marginal benefit curve of reading.

In Figure 1, the vertical axis measures marginal cost and marginal benefit, and the horizontal axis measures quantity that is time spent for reading. The MC curve is the marginal cost curve, and MB curve is the marginal benefit curve. The marginal cost of reading is constant, and marginal benefit of reading is decline over time...

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