# Managerial Economics Middleton

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enwb

Economics

## Description

Problem Set #1

To receive full credit, you must show all of your work. You may work with others in the class on this assignment, but the final write up MUST BE YOUR OWN. If you do work anyone else, please list them on your homework assignment to acknowledge their assistance

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Surname1
Students Name:
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Solutions to Problem Sets
Question One
a. The marginal benefit and the marginal cost of Q
MB=dB/dQ=29-Q
MC=dC/dQ=4Q
Since MB=MC
29-Q=4Q
29=4Q+Q
29=5Q
Q=29/5
=5.8
MB=29-5.8=23.2
MC= (4*5.8) =23.2
b.

The total benefit when Q = 4 and when Q=12
B (Q) = 29Q - Q2
When Q=4
B=29(4) - 42
Total Benefit =100
When Q=12
B=29(12) - 122
Total Benefit =204

c.

The marginal benefit when Q=4 and when Q=12
When Q=4
MB=29-Q
MB=29-4
=25
When Q=12

Surname 2
MB=29-12
=17
d. The level of Q that maximizes total benefits
Total benefits are maximized when MB=0 or 29-Q=0
-Q=-29
Q=29
e. What is the total cost when Q = 4 and when Q=12
C (Q) = 2 + 2 Q2
When Q=4
C=2+2 (4) 2
=34
When Q=12
C=2+2(12) 2
=290
f.

The marginal cost when Q=4 and when Q=12
MC=4Q
When Q=4
MC=4*4
=16
When Q=12
MC=4*12
=48

g. The level of Q that minimizes to...

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