The following functions represent the total benefit (TB) and total cost (TC) of a project as a function of capacity, Q: TB 1,000,000Q ^0.7 TC = 5000Q ^2 where TB and TC are expressed in dollars, present worth. Determine the optimal capacity (Q*) of the project graphically and analytically. (Hint: The optimal capacity is the level that maximizes total net benefit = total benefit minus total cost.)

The following functions represent the total benefit (TB) and total cost (TC) of a project as a function of capacity, Q: TB 1,000,000Q ^0.7 TC = 5000Q ^2 where TB and TC are expressed in dollars, present worth. Determine the optimal capacity (Q*) of the project graphically and analytically. (Hint: The optimal capacity is the level that maximizes total net benefit = total benefit minus total cost.)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 8E

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