Question

Andy wants to maximize his grade-point average. Having spent six hours studying for his test in economics, Andy calculates his grade and discovers that even with a perfect score on the final, he will not pass the course. He decides to study two more hours so he will not have wasted the first six hours. Is this a good decision? Why or why not?

Answer 1

This is not a good decision, because marginal gain or benefit from two hour of additional investment, is zero. It can be understood as follows.

After 6 hours of study = Maximum score he receives is 100 and does not pass the course

After 8 hours of study = Maximum score he receives is 100 and does not pass the course

So,

Marginal cost = 2 hours of study

Marginal benefit = 0 , as status of passing the course, does not change.

Since MC is higher than the MB, then it is not a good decision.