Suppose that an activity is having the following Marginal Benefit (MB) and Marginal Cost (MC) associated with it. Assume that
TB=0
and
TC=0
when the level of the activity is 0: \table[[\table[[Level of],[Activity]],MB,MC],[1,2000,1000],[2,1500,1200],[3,1400,1300],[4,1380,1320],[5,1370,1300],[6,1290,1420]] a. What is the optimal level of the activity? Explain. (1 point) b. What is the masimum Net flenefit (NB) passible from this activity? Show how you got your answer. (2 points)

Question

Suppose that an activity is having the following Marginal Benefit (MB) and Marginal Cost (MC) associated with it. Assume that

TB=0

and

TC=0

when the level of the activity is 0: \table[[\table[[Level of],[Activity]],MB,MC],[1,2000,1000],[2,1500,1200],[3,1400,1300],[4,1380,1320],[5,1370,1300],[6,1290,1420]] a. What is the optimal level of the activity? Explain. (1 point) b. What is the masimum Net flenefit (NB) passible from this activity? Show how you got your answer. (2 points)

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