Suppose that you can hire your mechanic for up to six hours.The total benefit and total cost functions are B(H)= 300H - 20H² and C(H)= 55H + 60H².The corresponding formulas for marginal benefit and marginal cost are MB(H)= 300 - 40H and MC(H)= 55 + 120H.How many hours should you hire your mechanic? A) 1.53 Hours B) 0.65 Hours C) 6 Hours D) 0 Hours

Question

Quizplus · Accepted Answer

To find the optimal number of hours to hire the mechanic, we need to compare the marginal benefit (MB) and marginal cost (MC) and choose the point where MB=MC.

MB(H)= 300 - 40H
MC(H)= 55 + 120H

Setting these two expressions equal to each other, we get:

300 - 40H = 55 + 120H

Solving for H, we get:

H = 1.53

Therefore, the optimal number of hours to hire the mechanic is approximately 1.53 hours. Hiring the mechanic for more than 1.53 hours increases the cost more than the benefits, while hiring for less than 1.53 hours means not fully utilizing the benefits of hiring the mechanic.

Suppose That You Can Hire Your Mechanic for Up to Six