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Can you please explain how to calculate Total Cost, Total Benefit, and Net Benefit from looking at a table? Also, can you explain what those three things and their calculations mean in words?Heres an example of the table I was talking about above:# of itemsMarginal benefitMarginal costTotal benefitTotal costNet benefit

Question

Can you please explain how to calculate Total Cost, Total Benefit, and Net Benefit from looking at a table? Also, can you explain what those three things and their calculations mean in words?

Heres an example of the table I was talking about above:

# of items Marginal benefit Marginal cost Total benefit Total cost Net benefit

 

check_circleAnswer
Step 1

Total cost is the cost that measures the total opportunity cost of each production factor irrespective of whether they are fixed or variable. This cost is denoted by TC and determines a specified level of output by including the cost of all inputs used in production.

Mathematically, TC = Sum of all inputs, i.e., TC = ∑Ci * Qi where Ci depicts the input cost “I” inputs used in production and Qi = Quantity of output produced by using “I” inputs.

Furthermore, the Marginal Cost (MC) is the derivative of TC with respect to total output produced, i.e.,

MC = ΔTC/ΔQ.

Step 2

Total benefit on the other hand measures the maximum amount a consumer is willing to pay for certain number of units. This benefit is denoted by TB and determines a specified level of output bought by consumers by placing total value upon that amount.

Mathematically, TB = Sum of price paid for each unit, ...

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