Q1. Suppose that you can schedule a worker up to four hours per day. The benefit function is given by B(H) = 500H - 22.5H2 and the cost function is given by C(H) = 100 +15H2. The corresponding marginal benefit and marginal cost functions are given by MB(H) = 500 - 45H and MC(H) = 100 + 30H. What is the best choice of hours for this worker?
Q2. Is the price mechanism of a perfectly competitive market a good mechanism to allocate gasoline?