For questions using the following marginal benefit and marginal cost functions for activity A:
MB = 100 - 5A
MC = 20 + 3A
-The fifth unit of activity A will

Question

For questions  using the following marginal benefit and marginal cost functions for activity A:
MB = 100 - 5A
MC = 20 + 3A
-The fifth unit of activity A will

Quizplus · Accepted Answer

To find the net benefit, we need to find the difference between marginal benefit and marginal cost. 
For the fifth unit of activity A, 
MB = 100 F1F1F1S1 - F1F1F10 5A = 100(1) - 5(5) = 75 
MC = 20 + 3(5) = 35 
Net benefit = MB - MC = 75 - 35 = 40 
Therefore, the fifth unit of activity A will increase net benefits by 40. 
The best choice is to continue with the fifth unit of activity A, as long as the marginal benefit remains greater than the marginal cost.

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