Question

At approximately what production level, q, is profit maximized?unitsWhat is the price of the product?price= ____dollarsWhat are the fixed costs?fixed costs = _____dollars

Answer 1

Solution:

(a) Maximum profit is the highest difference between the revenue R(q) and the cost C(q)/

Hence, the maximum profit from the given table is;

$6750-6075=675$

Thus, the production level is approximately at;

$q\approx3000units$

(b) The price P, of the product is;

$\begin{gathered} P=\frac{R(q)}{q} \\ P=\frac{6750}{3000} \\ P=2.25 \end{gathered}$

The price is 2.25 dollars.

(c) Fixed costs are costs that do not change when sales or production volumes increase or decrease.

Thus,

The fixed costs is 3750 dollars.