Question

Complete the table below. Clearly show the basis for each column estimates.

Control Variable	Total Benefits	Total Cost TC(Q)	Net Benefits NB(Q)	Marginal Benefit MB(Q)	Marginal Cost MC(Q)	Marginal Net Benefits MNB(Q)
Q	TB(Q)
100	1200	900		250	80
102	1670				90
104	2110				100
106	2520				110
108	2900				120
110	3250				130
112	3570				140
114	3860				150
116	4120				160
118	4350				170
120	4550				180

At what level of the control variable are the net benefits maximized? Explain.

What is the relationship between marginal benefit and marginal cost at the benefits maximizing level of the control variable? Explain the justification for this relationship with an appropriate economic theory.

Answer 1