Question: Suppose that the total benefit and total cost from a continuous activity are, respectively, given by the following equations: B (Q) = 100 + 36Q

Suppose that the total benefit and total cost from a continuous activity are, respectively, given by the following equations: B (Q) = 100 + 36Q – 4Q2 and C (Q) = 80 + 12Q. [MB (Q) = 36 – 8Q and MC (Q) = 12.
a. Write out the equation for the net benefits.
b. What are the net benefits when Q = 1? Q = 5?
c. Write out the equation for the marginal net benefits.
d. What are the marginal net benefits when Q = 1? Q = 5?
e. What level of Q maximizes net benefits?
f. At the value of Q that maximizes net benefits, what is the value of marginal net benefits?

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a Net benefits are NQ 20 24Q 4Q 2 b Net benefits when Q 1 are N1 20 24 4 40 and when Q 5 t... View full answer

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