Managerial Economics & Business Strategy 10th Edition by Michael Baye Test bank

Control variable Total Benefits Total Costs Net Benefits Marginal Benefit Marginal Cost Marginal Net Benefit
Q B(Q) C(Q) N(Q) MB(Q) MC(Q) MNB(Q)
0 0 0 0 − − −
1 900 100 800 900 100 800
2 1,700 300 C 800 200 600
3 2,400 600 1,800 700 E 400
4 A 1,000 2,000 600 400 200
5 3,500 1,500 2,000 500 500 F
6 3,900 2,100 1,800 D 600 −200
7 4,200 2,800 1,400 300 700 −400
8 4,400 B 800 200 800 −600
9 4,500 4,500 0 100 900 −800
10 4,500 5,500 −1,000 0 1,000 −1,000
50
100
200
300
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
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 99.
Award: 1.00 point
What is the marginal net benefit associated with producing five units of the control variable, Q (identify point F in the
table)?
Control variable Total Benefits Total Costs Net Benefits Marginal Benefit Marginal Cost Marginal Net Benefit
Q B(Q) C(Q) N(Q) MB(Q) MC(Q) MNB(Q)
0 0 0 0 − − −
1 900 100 800 900 100 800
2 1,700 300 C 800 200 600
3 2,400 600 1,800 700 E 400
4 A 1,000 2,000 600 400 200
5 3,500 1,500 2,000 500 500 F
6 3,900 2,100 1,800 D 600 −200
7 4,200 2,800 1,400 300 700 −400
8 4,400 B 800 200 800 −600
9 4,500 4,500 0 100 900 −800
10 4,500 5,500 −1,000 0 1,000 −1,000
−100
−75
0
100
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
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 100.
Award: 1.00 point
[Appendix material: calculus required] The marginal cost in the table is
Control variable Total Benefits Total Costs Net Benefits Marginal Benefit Marginal Cost Marginal Net Benefit
Q B(Q) C(Q) N(Q) MB(Q) MC(Q) MNB(Q)
0 0 0 0 − − −
1 900 100 800 900 100 800
2 1,700 300 C 800 200 600
3 2,400 600 1,800 700 E 400
4 A 1,000 2,000 600 400 200
5 3,500 1,500 2,000 500 500 F
6 3,900 2,100 1,800 D 600 −200
7 4,200 2,800 1,400 300 700 −400
8 4,400 B 800 200 800 −600
9 4,500 4,500 0 100 900 −800
10 4,500 5,500 −1,000 0 1,000 −1,000
increasing at an increasing rate.
decreasing at an increasing rate.
increasing at a constant rate.
decreasing at a decreasing rate.
References
Multiple Choice Difficulty: 03 Hard Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
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 
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 101.
Award: 1.00 point
[Appendix material: calculus required] The marginal benefit in the table is
Control variable Total Benefits Total Costs Net Benefits Marginal Benefit Marginal Cost Marginal Net Benefit
Q B(Q) C(Q) N(Q) MB(Q) MC(Q) MNB(Q)
0 0 0 0 − − −
1 900 100 800 900 100 800
2 1,700 300 C 800 200 600
3 2,400 600 1,800 700 E 400
4 A 1,000 2,000 600 400 200
5 3,500 1,500 2,000 500 500 F
6 3,900 2,100 1,800 D 600 −200
7 4,200 2,800 1,400 300 700 −400
8 4,400 B 800 200 800 −600
9 4,500 4,500 0 100 900 −800
10 4,500 5,500 −1,000 0 1,000 −1,000
increasing at a constant rate.
decreasing at a constant rate.
increasing at a decreasing rate.
decreasing at an increasing rate.
References
Multiple Choice Difficulty: 03 Hard Learning Objective: 01-06 Apply marginal analysis
to determine the optimal level of a managerial
control variable.
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 
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 102.
Award: 1.00 point
To maximize net benefits in the table, it is most appropriate to use
Control variable Total Benefits Total Costs Net Benefits Marginal Benefit Marginal Cost Marginal Net Benefit
Q B(Q) C(Q) N(Q) MB(Q) MC(Q) MNB(Q)
0 0 0 0 − − −
1 900 100 800 900 100 800
2 1,700 300 C 800 200 600
3 2,400 600 1,800 700 E 400
4 A 1,000 2,000 600 400 200
5 3,500 1,500 2,000 500 500 F
6 3,900 2,100 1,800 D 600 −200
7 4,200 2,800 1,400 300 700 −400
8 4,400 B 800 200 800 −600
9 4,500 4,500 0 100 900 −800
10 4,500 5,500 −1,000 0 1,000 −1,000
four units of the control variable, since the marginal benefit exceeds marginal cost.
six units of the control variable, since the marginal cost exceeds marginal benefit.
five units of the control variable, since net marginal benefits are zero.
one unit of the control variable, since marginal net benefits are highest.