QW
1. Use the graph below to answer the following questions:
a) At 200 units of the activity, marginal benefit is $__________ and marginal cost is $__________.
b) Adding the 200th unit of the activity causes net benefit to __________ (increase, decrease) by $__________.
c) At 700 units of the activity, marginal benefit is $__________ and marginal cost is $__________.
d) Subtracting the 700th unit of the activity causes net benefit to __________ (increase, decrease) by $__________.
e) The optimal level of the activity is __________units. At the optimal level of the activity, marginal benefit is $__________ and marginal cost is $__________.
2. Give an example from your own business-related experience of a situation in which a marginal analysis could be conducted. Explain how you would find and recommend the optimal level of activity for the situation.