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Managerial Economics & Business Strategy 7th Edition by Michael Baye, Stanley Brue, David MacPherson
Edition 7ISBN: 978-0073375960Managerial Economics & Business Strategy 7th Edition by Michael Baye, Stanley Brue, David MacPherson
Edition 7ISBN: 978-0073375960 Exercise 3
Suppose that the total benefit and total cost from an activity are, respectively, given by the following equations: B(Q) = 150 + 28Q - 5 Q₂ and C(Q) = 100 + 8Q. (Note: MB(Q) = 28 - 10 Q and MC(Q) = 8.)
a. Write out the equation for the net benefits.
b. What are the net benefits when Q = 1 Q = 5
c. Write out the equation for the marginal net benefits.
d. What are the marginal net benefits when Q = 1 Q = 5
e. What level of Q maximizes net benefits
f. At the value of Q that maximizes net benefits, what is the value of marginal net benefits
a. Write out the equation for the net benefits.
b. What are the net benefits when Q = 1 Q = 5
c. Write out the equation for the marginal net benefits.
d. What are the marginal net benefits when Q = 1 Q = 5
e. What level of Q maximizes net benefits
f. At the value of Q that maximizes net benefits, what is the value of marginal net benefits
Explanation
Verified
Verified
a.Net benefits are 
b.Net benefits when
b.Net benefits when 
Managerial Economics & Business Strategy 7th Edition by Michael Baye, Stanley Brue, David MacPherson
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