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21 March, 12:31

If the market price of each camera case is $8 what is the profit-maximizing quantity? 300 units 400 units 500 units 600 units

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  1. 21 March, 13:00
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    Profit will be maximum for the firm where marginal revenue = marginal cost.

    Since, the market price is fixed at $8 and therefore each additional unit of camera will be sold at $8.

    Hence, marginal revenue = $8.

    From the table, it is clear that cameras are manufactured in batches of 100.

    Marginal cost is the cost incurred to produce one additional unit of camera. It will be calculated by taking the difference of successive variable costs (or total costs) divided by 100.

    To produce 400th unit, marginal cost = (2760 - 1960) / 100 = $8

    Hence, profit maximising quantity isB. 400 (MR = MC)
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