Suppose total benefits and total costs are given by B(Y)= 600Y − 12Y² and C(Y)= 20Y².What level of Y will yield the maximum net benefits? A) 600/64 B) 600/32 C) 300/64 D) 300/32

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Quizplus · Accepted Answer

Net benefits are maximized when marginal benefits equal marginal costs. The marginal benefit is the derivative of the total benefit function, and the marginal cost is the derivative of the total cost function. So, we have:MB = dB/dY = 600 - 24YMC = dC/dY = 40YSetting MB = MC, we get:600 - 24Y = 40Y64Y = 600Y = 600/64 = 9.375

Suppose Total Benefits and Total Costs Are Given by B(Y)=