Use the following to answer question:
-(Table: The Cost and Benefit of Producing Gadgets)Use Table: The Cost and Benefit of Producing Gadgets.How many gadgets should you produce?

Question

Use the following to answer question: 
-(Table: The Cost and Benefit of Producing Gadgets)Use Table: The Cost and Benefit of Producing Gadgets.How many gadgets should you produce?

Quizplus · Accepted Answer

To determine the best choice for production, we need to compare the total cost and total benefit for each level of production. At 1 gadget, the total benefit is $60 but the total cost is $70, resulting in a net loss of $10. At 2 gadgets, the total benefit is $110 but the total cost is $90, resulting in a net gain of $20. At 3 gadgets, the total benefit is $150 but the total cost is $115, resulting in a net gain of $35. At 4 gadgets, the total benefit is $180 but the total cost is $145, resulting in a net gain of $35. At 5 gadgets, the total benefit is $200 but the total cost is $180, resulting in a net gain of $20. Therefore, the best choice(s) is 3 gadgets, as it provides the highest net gain of $35.

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