A Decision Maker Can Choose the Levels of Two Activities $$\begin{array} { l } M B _ { \mathrm { A } } = 40 A - 10 B \\M B _ { \mathrm { B } } = - 15 A + 35 B\end{array}$$

question 18

Short Answer

A decision maker can choose the levels of two activities, A and B, so as to maximize net benefits. The marginal benefit functions of A and B are
$$\begin{array} { l } M B _ { \mathrm { A } } = 40 A - 10 B \\M B _ { \mathrm { B } } = - 15 A + 35 B\end{array}$$ Activity A costs $160 per unit and activity B Costs $540 per unit.
a. The optimal level of activity A is _________ units.
b. The optimal level of activity B is _________ units.

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Definitions:

Equity Securities

Financial instruments representing ownership in a corporation, entity, or assets, such as stocks.

Short Period

A brief duration of time, particularly in accounting or financial contexts, often referring to less than one fiscal year.

Designated

Usually refers to something that has been officially assigned a particular status, role, or purpose.

Bond Investments

Financial instruments representing a loan made by an investor to a borrower, typically corporate or governmental.