Asked by Sally Suzie on May 14, 2024
Verified
suppose that the demand curve for antimacassars is p 53 Q/1,000.The firm's profit-maximizing output is closest to
A) 6,500 antimacassars.
B) 13,000 antimacassars.
C) 19,500 antimacassars.
D) 4,290 antimacassars.
E) 3,250 antimacassars.
Demand Curve
A graphical representation showing the relationship between the price of a good and the quantity of that good that consumers are willing to purchase at different prices.
Profit-Maximizing Output
The point of production where a company reaches its maximum possible profit.
Antimacassars
Protective coverings placed over the backs or arms of chairs and sofas to prevent soiling or wear, originally designed to protect furniture from the macassar oil used in men's hair grooming in the 19th century.
- Compute the most profitable production volumes for businesses operating within assorted market contexts.
Verified Answer
BB
Baris BeyduzMay 17, 2024
Final Answer :
B
Explanation :
To find the profit-maximizing output for the firm, we need to calculate the point where marginal revenue (MR) equals marginal cost (MC).
The inverse demand function given is:
p = 53 - Q/1,000
To find MR, we take the first derivative of the inverse demand function with respect to Q:
MR = d(p)/d(Q) = -1/1,000
Now, we need to set MR equal to MC to find the profit-maximizing output. Let's assume that the marginal cost of producing antimacassars is constant at $5 per unit.
-1/1,000 = 5
Q = 13,000
Therefore, the firm's profit-maximizing output is 13,000 antimacassars.
The inverse demand function given is:
p = 53 - Q/1,000
To find MR, we take the first derivative of the inverse demand function with respect to Q:
MR = d(p)/d(Q) = -1/1,000
Now, we need to set MR equal to MC to find the profit-maximizing output. Let's assume that the marginal cost of producing antimacassars is constant at $5 per unit.
-1/1,000 = 5
Q = 13,000
Therefore, the firm's profit-maximizing output is 13,000 antimacassars.
Learning Objectives
- Compute the most profitable production volumes for businesses operating within assorted market contexts.