1. Net Benefit (NB) = Total Benefit (TB) - Total Cost (TC) while Marginal Benefit (MB) = the change () in TB/ a change () in activity (A) and Marginal Cost (MC) = the change () in TC/ a change () in activity (A).Using these formulas, fill in the blanks on the table below.

A	TB	TC	NB	MB	MC
0	$0		$0	n/a	n/a
1			27	35
2	65				10
3	85	30
4			51		14
5		60		8
6				5	20

1. What is the optimal activity in the table above?
2. What is the value of net benefit at the optimal level of activity? Can net benefit be increased by moving to any other level of A? Explain.
3. Using the numerical values in the table, comment on the statement, "The optimal level of activity occurs where marginal benefit is closest to marginal cost."

1. Suppose you are interviewing three people for one sales job. On the basis of your experience and insight, you believe Jane can sell 600 units a day, Joe can sell 450 units a day, and Joan can sell 400 units a day. The daily salary each person is asking is as follows: Jane, $200; Joe, $150; and Joan, $100.How would you rank the three applicants?Show your work.

1. A decision maker is choosing the levels of two activities, A and B, so as to maximize total benefits under a given budget. The prices and marginal benefits of the last units of A and B are denoted P_A, P_B, MB_A, and MB_B.
2. IfP_A = $20, P_B = $15, MB_A = 400, MB_B = 600, what should the decision maker do?
3. If P_A = $20, P_B = $30, MB_A = 200, MB_B = 300, what should the decision maker do?
4. If P_A = $20, P_B = $40, MB_A = 300, MB_B = 400, how many units of A can be obtained if B is reduced by one unit? How much will benefits increase if this exchange is made?
5. If the substitution in part c continues to equilibrium and MB_A falls to 250, what will MB_B be?