Answer to Question #291289 in Microeconomics for Abdulla

Question

A two-year-old child is eating peanuts one at a time from a large box. Even though the child doesn’t understand formal economic theory, he knows when to stop eating because he is full. Describe how this child has already mastered marginal analysis.

Answer 1

The child quits eating when he is full because he intuitively understands that the additional benefit from the next peanuts will be nil or even negative.