Question

Total costs in the table are:

| M Control variable e 0 Total Benefits B(Q) arginal Benefit MB(Q) Marginal Cost MC(Q) Marginal Net Benefit MNB(Q) 0 900 1,700 100 200 Total Costs C(Q) 0 100 300 600 1,000 1,500 2,100 2,800 B 4,500 5,500 Net Benefits N(Q) 0 800 C 1,800 2,000 2,000 1,800 1,400 800 900 800 700 600 500 800 600 400 200 E D A 3,500 3,900 4,200 4,400 4,500 ,500 400 500 600 700 800 300 -200 -400 -600 -800 -1,000 200 100 0 c 900 10 T 4 -1,000|| 1,000

Select one:

a. decreasing at a decreasing rate.

b. decreasing at a constant rate.

c. increasing at a constant rate.

d. increasing at an increasing rate.

Answer 1

The correct option is d.) increasing at an increasing rate.

Total costs in the table is increasing at an increasing rate.

Net Benefit= Total Benefit- Total Costs

Net Benefit at 8 units of control variable= Total Benefit- Total Cost

800=4400-Total cost

Therefore, Total Cost= $3600

Total Cost Marginal cost

0 -   

100 100   

300 200   

600 300   

1000 400   

1500 500

2100 600

2800 700

3600 800   

4500 900   

5500 1000   

Marginal cost represents the slope of the total cost. It tell us at which rate total cost is increasing or decreasing.

In this table, Total cost is increasing at a increasing rate.It is because total cost is increasing and marginal cost is also increasing. It means that total cost is increasing at an increasing rate.