Nick is at a carnival. The entry ticket price is $5. At the carnival, Nick is considering how many hot dogs to eat if he were to think like an economist. Nick expects to gain an incremental benefit of $12 of enjoyment from the first hot dog, then gain subsequent incremental benefits of$7 from the second, $4 from the third and $1 from the fourth. The cost of each hot dog is $3.

Q1

In determining how many hot dogs to eat, the ticket is a/an (_______). A for Average cost, M for Marginal cost, S for Sunk cost or O for Opportunity cost.

Q2

Using marginal analysis, Nick should consume how many hot dogs?.

Q3

The maximum surplus for Nick, from eating the number of hot dogs you found in part b, is $. Answer to the nearest whole number (with no decimal places).