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Unformatted text preview: The total benefit ( TB ) and total cost ( TC ) functions for the activity are: TB = 2,500 A-10 A 2 TC = 500 A + 15 A 2 where TB and TC are measured in dollars. 1 d. For the optimal level of the activity in part c , the total benefit is $_________, the total cost is $_________, and the net benefit is $__________. Class exercise 2: Under the total revenue and total cost approach to profit maximization, a. firms equate total cost and total revenue in order to maximize profit b. the profit-maximizing output level is equivalent to the total revenue-maximizing output level c. when total costs are minimized, profits are maximized d. firms choose the output level where TR - TC is greatest e. total cost must always exceed total revenue in the long run 2...
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- Spring '10
- Economics, benefit