Question

Exercise 2. You are the manager of a firm that specializes in small single-board widgets. Your goal is to determine the number of units (Z) that must be produced and sold by your firm each month in order to maximize profits. The total benefits (revenues) and costs to your firm of producing various quantities are given in the first three columns of the following table. Based on this scenario, complete the table and answer the accompanying questions: 1 Marginal Net Control Total Total Marginal Net Benefits Variable Benefits Benefit Cost Cost B(Z N(Z) C(Z) MB (Z Benetit Z MNB (Z) 0 0 0 1 200 10 380 30 2 540 60 100 680 800 150 900 210 7 980 280 1,040 1,080 360 450 10 1,100 550

Answer 1

Answer 2

Formulas :

(i) N(Z) = B(Z) - C(Z)

(ii) MB(Z) = B(Z) - B(Z - 1)

(iii) MC(Z) = C(Z) - C(Z - 1)

(iv) MNB(Z) = MB(Z) - MC(Z)

Hence, using above formulas we have the following result :

Control Variable Total Benefit B(z) Total Cost C(z) Net Benefits N(Z) Marginal Benefit MB(Z) Marginal Cost MC(Z) Marginal Net Benefit MNB(Z) 190 160 30 200 180 160 140 Olle 100 150 200 380 540 680 800 900 980 1040 1080 1100 190 350 480 580 650 690 700 210 b80 280 360 450 550 630 550 -80