Question: Suppose that random access memory (RAM) can be added to your computer at a cost of $8 per gigabyte. Suppose also that the value to

Suppose that random access memory (RAM) can be added to your computer at a cost of $8 per gigabyte. Suppose also that the value to you, measured in terms of your willingness to pay, of an additional gigabyte of memory is $32 for the first gigabyte, and then falls by one-half for each additional gigabyte. Draw a graph of marginal cost and marginal benefit. How many gigabytes of memory should you purchase?

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The benefit of the 1st gigabyte is 32 the 2nd is 16 the 3rd is 8 the ... View full answer

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