3 For each of the following situations involving marginal co

3. For each of the following situations involving marginal cost (MC) and marginal benefit (MB), indicate whether it would be best to produce more, fewer, or the current number of units a. 3,000 units at which Mc $10 and MB $13 b. 11 units at which Mc -$4 and MB $3 c, 43,277 units at which MC # $99 and MB-$99 d. 82 units at which MC - MB e. 5 units at which MB

Solution

The optimal thing is porduce at MC = MB.

a) Since MB > MC, we must produce additional units.

b) MC > MB. Thus must produce fewer units.

c) MC = MB. Thuswe must producec current number of units.

d) MC < MB.we must produce more units.

e) MB < MC, we must produce fewer units.