LONG KIM VO
Hult International Business School MBA- North End Cohort
Managerial Economics
Fall 2014
PART I: FUNDAMENTALS OF MANAGERIAL ECONOMICS
QUESTIONS 1-4: 1. What are her yearly accounting costs of running the club?
Answer: D) $200,000 2. What are her total opportunity costs of running the club? Answer: G) $250,000 3. How much revenue from club memberships would she minimally need to earn to start making positive (non-negative) accounting profits for the club?
Answer: G) None of the above 4. How much revenue from club memberships would she minimally need to earn to start making positive (non-negative) economic profits for the club?
Answer: E) $225,000.
QUESTIONS 5 – 8: 5. What is the marginal benefit of producing the 3rd unit?
Answer: 90
Explanation: The total benefits of the 3rd unit is 310 and the the 2nd is 220. It mean the total benefits increase 90. So the marginal benefit of the 3rd unit is 90. 6. What is the marginal net benefit of producing the 2nd unit?
Answer: 50
Explanation:
MNB2 = MB2 – MC2 = (B2 –B1) – (C2-C1) = (220-120) – (100-50) =50 7. What is the marginal cost of producing the 4th unit?
Answer: 120
Explanation: MC4= C4-C3 =300-180 =120.

8. At what level of output is total net benefit maximized?
Answer: level 3. Explanation:
At level 2, the total benefit is 120 and up to 130 at level 3. However, at level 4 the total is 80 and go down in next level. So the level 3 is the total net benefit maximized.
Question 9-17:
Suppose that the total benefit depend on the level Q of a particular activity with total benefits given by B(Q) = 40Q - Q2 and total costs given by C(Q) = 300 + 10Q 9. Write out the equation for net benefits.
Answer: N(Q) = -Q2 + 30Q – 300 Explanation: N(Q) = B(Q)-C(Q) = 40Q-Q2 – 300 -10Q = -Q2+30Q-300. 10. What are net benefits when Q = 3? Show