You are the manager of a firm that specializes in selling exotic animals to zoos around the world. Your goal is to determine the number of baby zebras (Z) that must be born on your firm's farms each month in order to maximize profits. The total benefits (revenues) and costs to your firm of producing various quantities of zebras is given in the first three columns of the table below. Based on this scenario, complete the table and answer the accompanying questions;
(See data chart in attached file).
a. What level of zebra births maximizes net benefits?
b. What is the relation between marginal benefit and marginal cost at this level of Z?
c. Graph the total cost and total benefit curves.
d. On another graph, plot the points for the marginal cost, marginal benefit, and marginal net benefit.
e. Show how the two graphs relate to each other.
The solution shows how the two graphs relate to each other.