Question

Maria manages a​ bakery, that specializes in ciabatta​ bread, and has the following information on demand and​ costs:

Ciabatta Bread Sold Per Hour​ (Q)	Price​ (P)	Total Cost​ (TC)
0	​$6.00	​$2.502.50
1	5.50	6.006.00
2	5.00	8.508.50
3	4.50	10.5010.50
4	4.00	12.0012.00
5	3.50	13.0013.00
6	3.00	13.5013.50
7	2.50	14.5014.50
8	2.00	16.5016.50

a. To maximize​ profits, Maria should sell

loaves of ciabatta bread per hour. ​(Enter your response as an​ integer.)

Answer 1

Solution: 6 loaves of ciabatta bread per hour

Working:

Bread Sold	Price	TR (P *Q)	MR	TC	MC
0	6.0	0.0		2.5
1	5.5	5.5	5.5	6.0	3.5
2	5.0	10.0	4.5	8.5	2.5
3	4.5	13.5	3.5	10.5	2.0
4	4.0	16.0	2.5	12.0	1.5
5	3.5	17.5	1.5	13.0	1.0
6	3.0	18.0	0.5	13.5	0.5
7	2.5	17.5	-0.5	14.5	1.0
8	2.0	16.0	-1.5	16.5	2.0

The condition for the profit-maximization is where MR = MC. Thus Maria will sell 6 loaves of ciabatta bread

answered by: anonymous