Gregory wants to maximise his well-being and has a marginal benefit curve (MB) of donuts represented by MB = 5 – 2q. If the market price of donuts is $6, how many donuts should Gregory buy?
a) 0
b) 15
c) 40
d) 10
e) 20
a) 0
(Well being is maximized at the point where P = MB
So, 6 = 5 - 2q
So, 2q = 5 - 6 = -1
So, q = -1/2
Thus, Gregory shouldn't buy any donuts because q is negative at the
given price.)
Gregory wants to maximise his well-being and has a marginal benefit curve (MB) of donuts represented...
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