Cost-Benefit Analysis and Marginal Thinking

Decisions are made at the margin

The stop rule in numbers

Sunk costs are already gone

Averages mislead, margins decide

Each extra hour of studying tonight raises your expected grade value by 24, 19, 15 and 10 dollars in order, while each hour costs you 9, 13, 17 and 22 dollars of sleep and forgone work in order. How many hours should you study?

Months ago you paid 40 dollars for a nonrefundable concert ticket. Tonight of the concert you feel unwell, and an evening of rest at home is worth 20 dollars to you, while attending while sick is worth 5 dollars to you. What should a rational decision maker do?

A small bakery can produce up to four extra batches of bread today. The batches add marginal profits of 21, 15, 9 and 4 dollars in order, and their marginal costs of baker overtime are 8, 12, 14 and 19 dollars in order. How many batches maximize net value? Write the number of batches.

Extra hours of exam preparation raise your expected grade value by 18, 12 and 7 dollars in order, while each hour costs 10 dollars in sleep and energy. How many hours should you study?

You paid 300 dollars for a yearly gym membership and now value each visit at 9 dollars while each visit costs 6 dollars in travel and time. Attendance so far makes the membership a loss. What should guide tonight's decision?

Extra training sessions add benefits of 22, 16 and 11 dollars in order, and each session costs 13 dollars. Compute the total surplus from taking exactly the profitable number of sessions, and write the number.