Question

Please assist with the following question:

Q2. A decision maker is choosing the levels of two activities, X and Y, so as to maximize total benefits under a given budget. The prices and marginal benefits of the last units of X and Y are denoted P_X, P_Y, MB_X, and MB_Y.

a. If P_X = $30, P_Y = $40, MB_X = 420, and MB_Y = 640, what should the decision maker do? (1.5 pts)

b. If P_X = $15, P_Y = $17.50, MB_X = 750, and MB_Y = 840, what should the decision maker do? (1.5 pts)

c. If P_X = $56, P_Y = $14, MB_X = 2,800, and MB_Y = 1,050, how many units of Y can be obtained if X is reduced by one unit? How much will benefits increase if this exchange is made? (1.5 pts)

d. If the substitution in part c continues until the point of equilibrium is reached, and MB_Xrises to 3,360, then what will MB_Y be in equilibrium? (1.5 pts)

Q3. You are interviewing three people for one sales job. On the basis of your experience and insight, you believe Jack can sell 64 widgets per day, Jill can sell 50 widgets per day, and John can sell 100 widgets per day. The daily salary each person is asking is as follows: Jack, $100; Jill, $100; and John, $300. How would you rank the three applicants?

Answer 1