Assume that the short-run cost and demand data given in the tables below confront a monopolistic competitor selling a given product and engaged in a given amount of product promotion. What will the maximum total profits be?

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Business

17 September, 13:25

Assume that the short-run cost and demand data given in the tables below confront a monopolistic competitor selling a given product and engaged in a given amount of product promotion. What will the maximum total profits be?

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Braeden Bates · Answer 1

The correct answer is $90.

Explanation:

Profit maximization is one of the pillars of economic theory, explaining how companies seek to achieve a high level of profit to maximize their wealth and benefits, just as individuals do with their level of utility.

This concept is especially important in the microeconomic study, as it is a pillar of multiple economic models. This happens because maximizing the wealth or welfare level is a basic principle that companies follow when facing a certain economic activity. Profit maximization is the economic objective of companies, in order to increase the value of the company. This increase in the value of the company is what the shareholders and investors are looking for, which expect their investment in the company to be profitable.