Question

You are given the following data for your firm, which sells the only commercially-available Wifi-enabled cheese grater.

Q	P	TC
0	$100	$1,000
10	$95	$1,211
20	$90	$1,411
30	$85	$1,609
40	$80	$1,814
50	$75	$2,035
60	$70	$2,281
70	$65	$2,561
80	$60	$2,884
90	$55	$3,259
100	$50	$3,695

QUESTION:

The profit-maximizing quantity occurs at _______ and the profit-maximizing price occurs at _________.

(Since MC is in terms of Q², solving with calculus and algebra can be messy. Your table should give an exact answer.)

Select one:

a. Q=55; P=$90

b. Q=60; P=$70

c. Q=50; P=$75

d. Q=70; P=$65

Answer 1

Q	P	TC	TR (Q*P)
0	$100	$1,000	000
10	$95	$1,211	950
20	$90	$1,411	1800
30	$85	$1,609	2550
40	$80	$1,814	3200
50	$75	$2,035	3750
60	$70	$2,281	4200
70	$65	$2,561	4550
80	$60	$2,884	4800
90	$55	$3,259	4950
100	$50	$3,695	5000

The profit-maximizing quantity occurs at _______ and the profit-maximizing price occurs at _________

d. Q=70; P=$65

the profit will be maximized at the quantity where the difference between TR and TC will be highest and the TC will be increasing. From the given options the difference between TR and TC is highest at quantity 70 where price is $65

TR = 4550

TC = 2561

Profit = 4550 – 2561 = 1989