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Suppose that Michael stops by a hamburger restaurant, Five Men, to have lunch. He feels that the benefit from the first hamburger is worth $8.50, the benefit from the second one is worth $6.00, the benefit from the third one is worth $4.25, and the benefit from the fourth one is worth $3.00. The first hamburger costs him $3.00, the second one $3.50, the thirds one $4.00 and the fourth one $4.50.
(a) Calculate total benefit (TB), total cost (TC) and net benefits (NB) at each level of his hamburger consumption.
(b) Determine his optimal hamburger consumption and show if his optimal hamburger consumption maximizes NB.
(c) Obtain marginal benefit (MB) and marginal cost (MC) of each hamburger, and confirm your answer to part (b) by comparing MB and MC at each hamburger.
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