Bobs fim (e below) uses com produacts to manufacture dog food. The waste prodact
ID: 1103073 • Letter: B
Question
Bobs fim (e below) uses com produacts to manufacture dog food. The waste prodacts are piped into the Bay of Litle Fish. However, as a result of this waste by-product the costs of dog food production, the sales price of dog food and the revenue benefit to the fishing industry as a function of the level of Bob's production per hour Bob's maximum production rate is 10 fons/hr. The output of Bob that would maximize the total social benefits of activity undertaken by Bob is Select one: a. 6 b.7 c.8 d. 9Explanation / Answer
In the above case, Bob's firm has to produce at a point where his Marginal Revenue(MR) = Marginal Cost (MC).
Hence answer will be:
d) 9
as, MR= MC
(25*9)=225
LHS=RHS (PROVED)