The decision maker wishes to maximize the total benefit associated with three activities X, Y, and Z. The price per unit of activities, X, Y, and Z is $1, $2, and $3 respectively. The following table gives the ratio of the marginal benefit to the price of the activities for various levels of each activity:
a. If the decision maker chooses to use one unit of X, on unit of Y, and one unit of Z, the toatal benefit that results is $____________
b. For the fourth unit of activity Y, each dollar spent increases total benefit by $___________ The fourth unit of activity Y increases total benefit by $____________
c. Suppose the decision maker can spend a total of only $18 on the three activities. What is the optimal level of X, Y, and Z? Why is this combination optimal? Why is the combination 2X, 2Y, and 4Z not optimal?
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