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Suppose that the total benefit and total cost from a continuous activity are, respectively, given by the following equations: B(Q) = 100 + 36Q - 4Q2 and C(Q) = 80 + 12Q. Note that MB(Q) = 36-8Q and MC(Q) = 12.
a. Write out the equation for net benefits.
b. What are the net benefits when Q = 1? Q = 5?
c. Write out the equation for 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 Q that maximizes net benefits, what is the value of marginal net benefits?
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When do you think using code like this is appropriate?
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