In Figure, the total benefit and total cost curves are represented by the following mathematical functions: TB
Question:
In Figure, the total benefit and total cost curves are represented by the following mathematical functions:
TB = TB (A) = 8A – 0.004 A2
and
TC = TC (A) = A + 0.006 A2
a. Find the marginal benefit function. Verify that points c, b, and d in Figure lie on the marginal benefit curve.
b. Find the marginal cost function. Verify that points c’, b, and d’ in Figure lie on the marginal cost curve.
c. Derive the net benefit function. Verify the slopes of net benefit at points M, c”, and d” in Figure.
d. Find the optimal level of activity and the maximum value of net benefit. Does your answer match Figure?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Managerial Economics Foundations of Business Analysis and Strategy
ISBN: 978-0078021718
11th edition
Authors: Christopher Thomas, S. Charles Maurice
Question Posted: