Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Question
Chapter 1, Problem 6CACQ
To determine
(a)
To find:
The level of control variable at which net benefits are maximized.
To determine
(b)
To find:
The relation between marginal benefits and marginal costs at this level of variable.
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Describe the definition of cost-benefit analysis.
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Chapter 1 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Ch. 1 - Prob. 1CACQCh. 1 - What is the maximum amount you would pay for an...Ch. 1 - Prob. 3CACQCh. 1 - Prob. 4CACQCh. 1 - Prob. 5CACQCh. 1 - Prob. 6CACQCh. 1 - Prob. 7CACQCh. 1 - Prob. 8CACQCh. 1 - Prob. 9CACQCh. 1 - Prob. 10CACQ
Ch. 1 - Prob. 11PAACh. 1 - Prob. 12PAACh. 1 - Prob. 13PAACh. 1 - Prob. 14PAACh. 1 - Prob. 15PAACh. 1 - As a marketing manager for one of the worlds...Ch. 1 - Prob. 17PAACh. 1 - Prob. 18PAACh. 1 - Prob. 19PAACh. 1 - Prob. 20PAACh. 1 - Prob. 21PAACh. 1 - Prob. 22PAACh. 1 - Prob. 23PAACh. 1 - Prob. 24PAA
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- Consider an activity A that has the following marginal benefit (MB) and marginal cost (MC) functions: MB = 50 - 0.025A and MC 40 + 0.0254 and the following total benefit (TB) and total cost (TC) functions: TB 50A - 0.0125A and TC = 40A + 0.01254. What is the optimal level of activity? Select one: a.300 b.400 c.100 d.500 e.200arrow_forwardThere are both costs and benefits of studying. If you continue to study (say, for a test ) as long as the marginal benefits of studying are greater than the marginal costs and stop studying when the two are equal, will your action be consistent with having maximized the net benefits of studying? Explain your answerarrow_forwardMichael owns a strawberry farm in central California and is deciding how many strawberries to supply this month. Which question appropriately applies the cost-benefit principle to the supply decision? Is the price Michael gets for the extra bushel of strawberries at least as large as the marginal cost? What is the fixed cost of production for Michael's strawberries? If Michael was not producing strawberries, how else could he use his resources? Is Michael "holding all else constant" when making this decision?arrow_forward
- Suppose you work for United Airlines. You have been assigned to conduct a cost-benefit analysis for United Airlines on the question of whether or not United should offer service from Lynchburg Regional Airport to Washington Dulles International Airport (DC-Northern Virginia area). Stopping short of doing any actual calculations, discuss what would be involved in doing this analysis for United. (Even though you don’t have to do the actual calculations, you should be specific as to how you would do the calculations and obtain the necessary inputs.)arrow_forwardSuppose five people have houses on the same small lane. They all individually benefit from regular maintenance of the lane. Their individual marginal benefit curves are P = 8 ― (1/10)Q, where P reflects a willingness to pay in thousands and Q is the length of the road repaired in ten-yard units. The cost of maintenance is $2,000 per ten yards. Suppose one person is currently the only one paying for maintenance. How much does this person buy, and what is the deadweight loss? Does anyone individually have an incentive to pay for additional maintenance, and why or why not?arrow_forwardWhat can be used to determine if a choice is worth the cost? cost-benefit analysis choice-benefit analysis risk-benefit analysis trade-benefit analysisarrow_forward
- Jane enrolled in an online class to learn a new language. The online class will cost Jane $150. After enrolling in the class, Jane needs to consider how many hours she is willing to spend on learning a new language. For the first hour, Jane will get an incremental benefit of $85. Subsequently, she will only get incremental benefits of $74 from the second hour, $55 from the third, $30 from the fourth and $15 from the fifth. The cost to Jane, mainly due to fatigue and boredom, is $6 for the first hour, $12 for the second hour, $19 for the third hour, $29 for the fourth hour and $40 for the fifth hour. Using marginal analysis, Jane should spend how many hours learning?. The maximum surplus for Jane, from spending the number of hours learning which you found in part b, is $. Answer to the nearest whole number (with no decimal places).arrow_forwardGive an example of how scarcity of a product would have an impact on a microeconomic level. Please explain your rationale.arrow_forwardQUESTION 2 After receiving an impressive commendation following a project, Ash realised the key to her inspiration and success was eating goji berries before starting her work. Ash can buy any number of kilograms of berries for $20 per kilogram. Ash gains a total benefit of $50 from consuming 2 kilograms of berries, and a total benefit of $65 from consuming 3 kilograms of berries. Which of the following statement(s) are true: There is insufficient information to determine the marginal cost of the third kilogram of berries. The average benefit of consuming the third kilogram of berries is $15. Ash should buy the third kilogram of berries because the marginal cost is less than the marginal benefit. The marginal benefit of consuming the third kilogram of berries is $15.arrow_forward
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