PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Chapter 4, Problem 7RQ
To determine
The purpose of calculating the batting average for each player and for each team related to the idea of aggregation in
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Teletronics reported record profits of $100,000 last year and is on track to exceed those profits this year. Teletronics competes in a very competitive market where many of the firms are merging in an attempt to gain competitive advantages. Currently, the company’s top manager is compensated with a fixed salary that does not include any performance bonuses. Explain why this manager might nonetheless have a strong incentive to maximize the firm’s profits. (LO4, LO5)
Complete the accompanying table and answer the accompanying questions. (L01, LO6, LO7)
a. At what level of the control variable are net benefits maximized?
b. What is the relation between marginal benefit and marginal cost at this levelof the variable?
Control Variable Q
Total Benefits B(Q)
Total Cost C(Q)
Net Benefits N(Q)
Marginal Benefit MB(Q)
Marginal Cost MC(Q)
Marginal Cost MC(Q)
100
1200
950
60
101
1400
70
102
1590
80
103
1770
90
104
1940
100
105
2100
110
106
2250
120
107
2390
130
108
2520
140
109
2640
150
110
2750
160
The accompanying table shows the total costs and total benefits, in billions of U.S. dollars, for four different antipollution
programs of increasing scope. Use cost-benefit analysis to determine which program should be undertaken. (LO2)
Program Total Cost Total Benefit
A
$ 100
KBC D
В
с
280
480
1,240
$200
350
470
580
Chapter 4 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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