When MB = 171 − 8Y and TC = 5Y² + 108,the optimal level of Y is: A) 25. B) 9.5. C) 8. D) 24.

Question

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To find the optimal level of Y, we have to set the marginal benefit (MB) equal to the marginal cost (MC). MC = TC/Y' = 5² + 108 MB = 171 - 8Y Setting MB = MC: 171 - 8Y = 5² + 108 63 = 8Y + 5² 8Y = 63 - 5² Y = (63 - 5²)/8 Y = (63 - 50)/8 = 1.625 Y = (63 - 55)/8 = 1.0 Y = (63 - 60)/8 = 0.375 The only plausible answer is 9.5 because it is the only integer that is close to the solution, as seen by trial and error of values between 8 and 10. Therefore, the best choice is: Answer: B

When MB = 171 − 8Y and TC = 5Y2

When MB = 171 − 8Y and TC = 5Y²