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uppose that the total benefit and total cost from an activity are, respectively, given by the following equations: B ( Q ) =150 + 28Q
uppose that the total benefit and total cost from an activity are, respectively, given by the
following equations: B
(
Q
)
=150 + 28Q - 5Q and C(Q) = 100 + 8Q. (Note:
MB(Q) = 28 - 10Q and MC(Q)
=
8.)
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 that maximizes net benefits, what is the value of marginal net benefits?
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