Suppose a new power plant meant to provide power to a metropolitan area is to be constructed and its power must go to urban and suburban areas.Suppose marginal cost is (1/6)Q and the marginal beneftis for urban areas is MB U =1400-Q U and marginal benefits for suburban areas is MB S =2,000-(1/2)Q S .
-What is the total quantity of electricity that should be produced?
A)3,600
B)4,000
C)2,800
D)3,400

Question

Quizplus · Accepted Answer

The total quantity of electricity should be produced where the sum of marginal benefits equals the marginal cost. Solving the equations 1400-Q + 2000-(1/2)Q = (1/6)Q gives Q = 3,600.

Suppose a New Power Plant Meant to Provide Power to a Metropolitan