Problem # 3

Z
0
1
2
3
4
5
6
7
8
9
10

total benefits B(Z)

0
200
380
540
680
800
900
980
1040
1080
1100

total costs C(Z)

0
10
30
60
100
150
210
280
360
450
550

c) Graph the total cost and total benefit curves

To tal cost and total be ne fits curve s

total benefits B(Z)

total costs C(Z)

1200
1000
800
600
400
200
0

d. On another graph, plot the points for the marginal cost, marginal benefit, and marginal net

MARGINAL COST, MARGINAL BENEFITS, AND MARGINAL NET BENEFITS

marginal benefits MB(Z) --

marginal costs MC(Z) --

marginal net benefits MNB(Z) --

e. Show how the two graphs relate to each other.

Marginal net benefit equals zero for the
same value of Z where the difference
between total benefits and total costs is
greatest. This is also where marginal benefit
and marginal cost intersect.

net benefits N(Z)

0
190
350
480
580
650
690
700
680
630
550

marginal benefits MB(Z)

-200
180
160
140
120
100
80
60
40
20

nal benefit, and marginal net benefit

BENEFITS

marginal costs MC(Z)

-10
20
30
40
50
60
70
80
90
100

marginal net benefits MNB(Z)

-190
160
130
100
70
40
10
-20
-50
-90