Activity A has the following marginal (MB) and marginal cost (MC) functions:
MB = 2,500 - 20A
MC = 500 + 30A
where MB and MC are measured in dollars.
a. The 10^th unit of the activity increases total benefit by $_________ and increases total cost by $_________. Since marginal benefit is _________ (greater, less) than marginal cost, adding the 10^th unit of activity _________ (increases, decreases) net benefit by $_________.
b. The 50^th unit of the activity increases total benefit by $_________ and increases total cost by $_________. Since marginal benefit is _________ (greater, less) than marginal cost, subtracting the 50^th unit of activity _________ (increases, decreases) net benefit by $_________.
c. The optimal level of the activity is ________ units. At the optimal level of activity, marginal benefit is $_________ and marginal cost is $__________.
The total benefit (TB) and total cost (TC) functions for the activity are:
TB = 2,500A -10A²
TC = 500A + 15A²
where TB and TC are measured in dollars.
d. For the optimal level of the activity in part c, the total benefit is $_________, the total cost is $_________, and the net benefit is $__________.

Question

Quizplus · Accepted Answer

The Answer of Activity A has the following marginal (MB) and marginal cost (MC) functions: MB = 2,500 - 20A MC = 500 + 30A where MB and MC are measured in dollars. a. The 10^th unit of the activity increases total benefit by $_________ and increases total cost by $_________. Since marginal benefit is _________ (greater, less) than marginal cost, adding the 10^th unit of activity _________ (increases, decreases) net benefit by $_________. b. The 50^th unit of the activity increases total benefit by $_________ and increases total cost by $_________. Since marginal benefit is _________ (greater, less) than marginal cost, subtracting the 50^th unit of activity _________ (increases, decreases) net benefit by $_________. c. The optimal level of the activity is ________ units. At the optimal level of activity, marginal benefit is $_________ and marginal cost is $__________. The total benefit (TB) and total cost (TC) functions for the activity are: TB = 2,500A -10A² TC = 500A + 15A² where TB and TC are measured in dollars. d. For the optimal level of the activity in part c, the total benefit is $_________, the total cost is $_________, and the net benefit is $__________.

Activity a Has the Following Marginal (MB) and Marginal Cost