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9. Suppose the total benefit derived from a given decision, Q, is B(Q) = 25Q-Q and the corresponding total cost is C(Q) = 5 + Q², so that MB(Q) = 25-20 and MC(Q) = 2Q. a. What is total benefit when Q = 2? Q = 10? b. What is marginal benefit when Q = 2? Q = 10? c. What level of Q maximizes total benefit? d. What is total cost when Q = 2? Q= 10? e. What is marginal cost when Q = 2? Q = 10? f. What level of Q minimizes total cost? g. What level of Q maximizes net benefits?

9. Suppose the total benefit derived from a given decision, Q, is B(Q) = 25Q-Q and the corresponding total cost is C(Q) = 5 + Q², so that MB(Q) = 25-20 and MC(Q) = 2Q. a. What is total benefit when Q = 2? Q = 10? b. What is marginal benefit when Q = 2? Q = 10? c. What level of Q maximizes total benefit? d. What is total cost when Q = 2? Q= 10? e. What is marginal cost when Q = 2? Q = 10? f. What level of Q minimizes total cost? g. What level of Q maximizes net benefits?

Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter7: Economies Of Scale And Scope
Section: Chapter Questions
Problem 7.5IP
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  1. Suppose the total benefit derived from a given decision, QQQ, is B(Q)=25Q−Q2B(Q) = 25Q - Q^2B(Q)=25Q−Q2 and the corresponding total cost is C(Q)=5+Q2,C(Q) = 5 + Q^2,C(Q)=5+Q2, so that MB(Q)=25−2Q and MC(Q)=2Q.MB(Q) = 25 - 2Q \text{ and } MC(Q) = 2Q.MB(Q)=25−2Q and MC(Q)=2Q.

a. What is total benefit when Q=2Q = 2Q=2? Q=10Q = 10Q=10?

b. What is marginal benefit when Q=2Q = 2Q=2? Q=10Q = 10Q=10?

c. What level of QQQ maximizes total benefit?

d. What is total cost when Q=2Q = 2Q=2? Q=10Q = 10Q=10?

e. What is marginal cost when Q=2Q = 2Q=2? Q=10Q = 10Q=10?

f. What level of QQQ minimizes total cost?

g. What level of QQQ maximizes net benefits?

9. Suppose the total benefit derived from a given decision, Q, is B(Q) = 25Q-Q and the corresponding total cost is C(Q) = 5 + Q², so that MB(Q) = 25-20 and MC(Q) = 2Q. a. What is total benefit when Q = 2? Q = 10? b. What is marginal benefit when Q = 2? Q = 10? c. What level of Q maximizes total benefit? d. What is total cost when Q = 2? Q= 10? e. What is marginal cost when Q = 2? Q = 10? f. What level of Q minimizes total cost? g. What level of Q maximizes net benefits?
Transcribed Image Text:9. Suppose the total benefit derived from a given decision, Q, is B(Q) = 25Q-Q and the corresponding total cost is C(Q) = 5 + Q², so that MB(Q) = 25-20 and MC(Q) = 2Q. a. What is total benefit when Q = 2? Q = 10? b. What is marginal benefit when Q = 2? Q = 10? c. What level of Q maximizes total benefit? d. What is total cost when Q = 2? Q= 10? e. What is marginal cost when Q = 2? Q = 10? f. What level of Q minimizes total cost? g. What level of Q maximizes net benefits?
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