Question

Questloh 10 Consider the table below: What price do you think the company is charging for its product 500 600 700 800 900 1000 1100 C(q), in $ 5000 5500 6000 6500 7000 7500 8000 R(q), in $ 4000 4800 5600 1640017200 8000 8800 o ООО é o O a. $8 O b. $3 O c. $9 O d. $5 O e. None of these

Answer 1

Answer
Option a

the compnay will produce at maximum profit
Profit (q)=total revenue -total cost=C(q)-(R(q)
Profit(500)=4000-5000=-1000
Profit(600)=4800-5500=-700 and so on
Profit(700)=-400
Profit(800)=-100
Profit(900)=200
Profit(1000)=500
Profit(1100)=800
the profit is maximum at $8 so the firm produce 1100 units
as
Price =total revenue /quantity=8800/1100=$8