Question

The FitBit is a device that monitors various health and fitness activities of a person. When it was first introduced by FitBit Inc., the FitBit was the only device of its type in the market. Assume this is still the case and that the marginal cost of production is $55 per FitBit. Below is a table of potential prices that could be charged and the corresponding quantities.

Price ($/FitBit)	Quantity (FitBits)
160	60
145	70
130	80
115	90
100	100

What is FitBit Inc.'s revenue at their profit maximising level of production? Answer to the nearest whole number (with no decimal places or $ sign).

Answer 1

Marginal cost of production is $55 per FitBit

Table of potential prices that could be charged and the corresponding quantities.

The table also depicts the total revenue and marginal revenue.

Total Revenue = Price * Quantity produced

Marginal revenue = Δ in TR ÷ Δ in Quantity

Price ($/FitBit)	Quantity (FitBits)	TR	MR
160	60	9600
145	70	10150	55
130	80	10400	25
115	90	10350	-5
100	100	10000	-35

What is FitBit Inc.'s revenue at their profit maximizing level of production?

Condition for profit maximizing level of production is marginal cost must be equal to marginal revenue.

MC = MR

Given MC = $55 per FitBit

The MC is equal to MR at Quantity 70.

At quantity 70, the total revenue is $10,150.

Therefore, FitBit Inc.'s revenue at their profit maximizing level of production is $10,150.