Answer to Question #49466 in Macroeconomics for stephanie

Question

your friend inherited a pizza restaurant in Fontana. Your friend is trying to decide whether to expand the delivery radius to include Rancho Cucamonga and asks for help. First, explain what marginal benefit and marginal cost analysis is. then make a list of things to investigate to determine the likely impact on revenue and costs. You do not need actual data. be sure to identify whether each item on your list impacts marginal benefit or marginal cost.

Answer 1

If my friend is trying to decide whether to expand the delivery radius to include Rancho Cucamonga and asks for help, firstly, we need to analyse what marginal benefits and marginal costs may be during and after the expanding of delivery radius. The increase of number of customers, popularity of the restaurant, additional advertising, increase of production and total revenues are likely to have impact on revenue and marginal benefit. Increase in fixed and variable costs for transportation and production more pizza, high risks to fail in new places and existence of competitors there are likely to have impact on total and marginal costs.