Question
(a)Complete the table below. Clearly show the calculation for each missing data point in each column. Control Variable Q /Total Benefits TB(Q)/ Total Cost TC(Q)/
(a)Complete the table below. Clearly show the calculation for each missing data point in each column.
Control Variable Q /Total Benefits TB(Q)/ Total Cost TC(Q)/ Net Benefits NB(Q)/ Marginal Benefits MB(Q)/Marginal Cost MC(Q)/Marginal Net
100 1200 900 257.5 70
104 2110 90
108 2900 110
112 3570 130
114 3875 140
115 4020 145
116 4157.5 150
120 4587.5 170
(b)From the table in (a), determine the net benefits maximizing level of the control variable Q.
(c)Use the relationship between marginal benefit and marginal cost at the various level of the control variable to explain why the level of the control variable in (b) is regarded as the economically optimal level.
(d)Provide a graphical illustration and a brief explanation in support of your response in (c) above.
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