Author Question: What are the steps involved in optimization in levels? If option A has a cost of 5 and provides a ... (Read 59 times)

yoooooman · **on:** Jun 29, 2018

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?

Question 2

Third-degree price discrimination occurs when:

A) different groups of consumers are charged different prices.
B) consumers are charged different prices at different points of time.
C) consumers are charged different prices according to their willingness to pay.
D) consumers are charged different prices based on the characteristics of their purchases.

Kedrick2014 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

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.

Answer to Question 2

A