The following schedule shows demand and total cost.
Price Quanity Total cost
$30 10 $200
29 11 208
28 12 217
27 13 227
26 14 238
25 15 250
24 16 263
To maximize profit firm should produce _____units of output and charge a price of $______
P $26 X Q 14 = $ 364 - Cost $238 = $126 , Which is max Profit among those.
To determine the quantity of output that maximizes profit and the corresponding price, we need to find the point where the profit is maximized. Profit is calculated by subtracting the total cost from the total revenue.
To find the total revenue, we multiply the price by the quantity. The total cost is given in the schedule.
Let's calculate the total revenue for each row in the table:
Row 1: Total revenue = $30 * 10 = $300
Row 2: Total revenue = $29 * 11 = $319
Row 3: Total revenue = $28 * 12 = $336
Row 4: Total revenue = $27 * 13 = $351
Row 5: Total revenue = $26 * 14 = $364
Row 6: Total revenue = $25 * 15 = $375
Row 7: Total revenue = $24 * 16 = $384
Now, let's calculate the profit for each row. Profit is the difference between total revenue and total cost:
Row 1: Profit = $300 - $200 = $100
Row 2: Profit = $319 - $208 = $111
Row 3: Profit = $336 - $217 = $119
Row 4: Profit = $351 - $227 = $124
Row 5: Profit = $364 - $238 = $126
Row 6: Profit = $375 - $250 = $125
Row 7: Profit = $384 - $263 = $121
To find the quantity of output that maximizes profit, we need to identify the row with the highest profit. In this case, it is Row 5, where the profit is $126.
Therefore, the firm should produce 14 units of output to maximize profit.
To find the corresponding price, we need to look at the price column for Row 5, which is $26.
Thus, the firm should produce 14 units of output and charge a price of $26 to maximize profit.