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18 July, 06:47

Demand for earbuds is represented by: P = 402 - 2Q The costs are $8 per set of earbuds. In order to stock earbuds, other items which average $2 in profit must be taken off the shelf. How many earbuds should you order?

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  1. 18 July, 06:51
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    Q is 98

    Explanation:

    Marginal (average) cost (including opportunity cost) = $8 + $2 = $10

    Profit is maximized when MR = MC = 10.

    P = 402 - 2Q

    Total revenue (TR) = P x Q = 402Q - 2Q^2

    MR = dTR/dQ = 402 - 4Q

    Equating with MC,

    402 - 4Q = 10

    4Q = 392

    Q = 98
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