Question

Julius builds dining chairs that he sells for $200 a chair. His fixed costs are $1,000 (for workshop equipment). Each chair costs him $50 in materials to produce plus an extra $25 for each previous chair made that day which reflects Julius' increasing exhaustion. (Thus, the first chair cost $50, the second costs $75, the third cost $100, etc.) Assume time requirements in producing a chair are not a factor. How many chairs should Julius produce each day?

5 12 2 7

Answer 1

Answer:

As per given Data MC is increasing with the output:

Q	MC
1	50
2	75
3	100
4	125
5	150
6	175
7	200

The optimum production is MR=MC

MR is given to be $200

So from above table we can say that at Q = 7 , MR = MC

So Julius produce 7 chairs

Correct option: D] 7 chairs