Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince

Exercise 21

Suppose the total benefit derived from a continuous decision, Q , is B ( Q ) = 20 Q - 2 Q 2 and the corresponding total cost is C ( Q ) = 4 + 2 Q 2 , so that MB ( Q ) = 20 - 4 Q and MC ( Q ) = 4 Q.
a. What is total benefit when Q = 2? Q = 10?
b. What is marginal benefit when Q = 2? Q = 10?
c. What level of Q maximizes total benefit?
d. What is total cost when Q = 2? Q = 10?
e. What is marginal cost when Q = 2? Q = 10?
f. What level of Q minimizes total cost?
g. What level of Q maximizes net benefits?