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mge 302 ub

mge 302 ub

Description

School: University at Buffalo
Department: Management Economics
Course: Applied Economics
Professor: H isse
Term: Fall 2015
Tags: Marginal Benefit and marginal cost
Cost: 25
Name: Notes for CHP 3
Description: Answers to questions of Notes given in class by prof.
Uploaded: 04/01/2017
4 Pages 190 Views 0 Unlocks
Reviews


1. Fill in the blanks in the following table to answer the questions below.

Units of Activity

A

Total Benefit

TB

Total CostWe also discuss several other topics like How does survival of offspring happen?
Don't forget about the age old question of What is a sectional form consisting of three principal parts (ABA) in which each section is a complete musical statement?
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TC

Net Benefit

NBIf you want to learn more check out What is the equation for Riemann Sums?

Marginal Benefit

MB

Marginal CostIf you want to learn more check out eluting power tlc

MC

0

$0

$0

$0

0

+0

1

$35

$8

$27

+35

+8

2

$65

$18

$47

+30

$10

3

$85

$30

$55

+20

$12

4

$95

$44

$51

+10

$14

5

$103

$60

$43

$8

$16

6

$108

$80

$28

$5

$20

MB > MC        MB < MCIf you want to learn more check out What are the 5 Eukaryotic structures?

a. What is the optimal level of activity in the table above?         3rd unit 一 above 3.

b. What is the value of the net benefit at the optimal level of activity? Can the benefit be increased by moving to any other level of A?                 No; 3rd unit 一 again!

Now suppose a fixed cost of $24 is added to the process of the activity above. Fill in the blanks in the table below. (AC is the average cost per unit of activity).

TB

TC

NB

MB

MC

AC

0

0

$24

$-24

1

$35

$35

$3

$35

$8

$32

2

$65

$42

$23

$30

$10

3

$85

$54

$31

$20

$12

4

$95

$68

$27

$10

$14

5

$103

$84

$19

$8

$16

6

$108

$104

$4

$5

$20

        c. How does adding $24 of fixed costs affect total cost? Net Benefit? No

d. How does adding $24 of fixed costs affect marginal cost? Did the optimal level of activity change? No

e. What level of activity minimizes average cost per unit? Is this the optimal level of activity?

A

B

C

$ / Copies

0.005

0.0067

0.0045

2. An office manager is considering purchasing a new copy machine for the office. Copy machine Brand A cost $2,500 and will produce about 500,000 copies before it wears out. Brand B will produce 600,000 copies and cost $4,000. Branch C will produce 580,000 copies and costs $2,600. How should the office manager rank the three copy machine brands in terms of value for the amount of money spent?

A

B

C

Copies

500,000

600,000

580,000

Price

$2,500

$4,000

$26,00

Copies / $

3. An advertising executive wants to find the optimal level of two marketing activities X and Y, which yield the expected total benefits presented in the table below. The cost of activity X is $400 per unit and the cost of activity Y is $1000 per unit.

Level of activity

Total benefit of activity X

Total benefit of activity Y

MBx

MBx/Px

MBy

MBy/Py

0

$0

$0

1

800

1,000

800

2

1.000

1

2

1,440

1,900

640

1.6

900

0.9

3

2,000

2,700

560

1.4

800

0.8

4

2,360

3,400

360

0.9

700

0.7

5

2,680

4,000

320

0.8

600

0.6

6

2,960

4,500

280

0.7

500

0.5

7

3,200

4,900

240

0.6

400

0.4

8

3,400

5,200

200

0.5

300

0.3

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