What are the steps involved in optimization in levels? If option A has a cost of $5 and provides a benefit of $8, and option B has a cost of $10 and provides a benefit of $15, which of the two projects is optimal?
What will be an ideal response?
The steps involved in optimization in levels are:
a) Translate all costs and benefits into common units, like dollars.
b) Calculate the total net benefit of each alternative.
c) Pick the alternative with the highest net benefit.
Total net benefit in option A = $(8 - 5 ) = $3
Total net benefit in option B = $(15 - 10 ) = $5
Because option B has a higher net benefit than option A, option B is the optimal choice of the two.
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If scarcity was not a fact, a. people could have all they wanted of goods and services for free
b. it would no longer be necessary to make choices. c. poverty, defined as the lack of a minimum level of consumption would also be eliminated. d. all of the above would be true.
A perfectly competitive firm in the factor and product markets sells its output for $1 and pays factors PL = $9 and Pc = $12. What is the profit-maximizing combination of labor (L) and capital (C) for the firm?
What will be an ideal response?