five units of the control variable, since net marginal benefits are zero. None o

Question

five units of the control variable, since net marginal benefits are zero.

None of the statements associated with this question are correct.

six units of the control variable, since the marginal cost exceeds marginal benefit.

four units of the control variable, since the marginal benefit exceeds marginal cost.

Total Costs C(O Total Control VariableBenefits Net Benefits MarginalMarginalMarginal Cost MCIO Benefit Net Benefit B(O MNBO 900 1.700 2.400 100 300 600 ,000 1,500 2.100 2.800 900 800 700 600 500 100 200 800 600 400 200 800 3.500 3.900 4.200 4.400 4.500 4,500 1,800 2,000 2,000 1,800 1,400 800 400 500 600 700 800 900 1,000 -200 -400 -600 800 1000 300 200 100 4.500 5,500 10 1.000

Explanation / Answer

Maximise Net benefits it is always the case where Marginal Benefits equal marginal Cost that is net Marginal Benefit equals to 0

In our case when Control Variable is 5 there MB=MC=500

Hence Option 1 is correct response

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