outputs homework problem ECON help!
1. The manufacturer of a music company wants to maximize profits, and must decide what level of output (Q) to produce. The total benefits (revenues) and total costs for various levels of output are given below in millions of dollars. Rewrite the following table on your separate paper, and complete the table and answer the following questions.
|
1 |
2 |
3 |
4 |
5 |
6 |
7 |
|
Output (Q) |
Total Benefits (Revenues) |
Total Costs |
Profits = Total Benefit – Total Costs |
Marginal Benefits |
Marginal Costs |
Marginal Net Benefits |
|
0 |
0 |
0 |
—– |
—- |
—- |
|
|
1 |
100 |
10 |
||||
|
2 |
180 |
40 |
||||
|
3 |
220 |
80 |
||||
|
4 |
240 |
140 |
||||
|
5 |
210 |
240 |
a. What level of output maximizes net benefits?
b. At that level of output, what is Marginal Cost? What is Marginal Benefit?
c. What would happen if the company decided to maximizes TOTAL benefits (instead of Marginal benefits)?
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