Question

How do you know which number of Q maximizes profits because i have several problems like this ?

For the profit schedule below, what is the Q* that maximizes profits?
Note: Enter Q not Π (Q)

Quantity
0	-25
1	-16
2	-8
3	1
4	9
5	14
6	23
7	14
8	8
9	0

Answer 1

In this case, Profit-maximizing Q* = 6 units

From the given profit schedule, first find out the highest positive value for profit. If all profit values are negative (i.e. there is loss at every level of Q, find the lowest negative number which means minimum loss). Then, look at the value of Q in the same row for this profit-maximizing (or loss-minimizing level). That is your optimal Q*.

In this case, highest value of profit = +23, therefore corresponding Q* = 6