5. Suppose you can hire a mechanic to work on your car for up to six...

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5. Suppose you can hire a mechanic to work on your car for up to six hours MC MB ICI Hours (H) Hours (H) (a) Suppose the marginal benefit and marginal cost curves for your car repair decision are as shown in the figure on the left. What is the choice that maximizes your net benefit? (b) Suppose the marginal benefit and marginal cost curves for your car repair decision are as shown in the figure on the right. What is the choice that maxiizes your net benefit?

business economics

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Answer 1

Answer #1

A) if mechanic works for 0 hours then I can maximize my profit because at 0 hours difference between MC and MB is minimum. And profit maximisation occur when MC =MB.

B) in this case the net benefit maximisation occur when mechanic works for 6 hours because difference between MC and MB is minimum at 6 Hour of work.

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Answer 2

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