Microeconomics: Principles, Applications, and Tools (8th Edition)

Published by Prentice Hall
ISBN 10: 0-13294-886-9
ISBN 13: 978-0-13294-886-9

Chapter 2 - The Key Principles of Economics - Exercises - 2.2 The Marginal Principle - Page 44: 2.1

Answer

yes

Work Step by Step

Even though the cost per cab is \$420 if the company has 10 cabs, the marginal cost of the 10th cab is only \$200 (4200-4000). Since the increased revenue of \$300 exceeds the marginal cost of the 10th cab, the company should purchase the cab.
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