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The Zinger Company: Total Profit at Optimal Level

The Zinger Company manufactures and sells a line of sewing machines. Demand per period (Q) for a particular model is given by the following relationship:
Q = 400 - .5P
where P is price. Total costs (including a "normal" return to the owners) of producing Q units per period are:
TC = 20,000 + 50Q + 3Q2. What are total profits at the optimum level of output for Zinger Company?

a. $81,250

b. $812.50

c. $8,125

d. $812,500

Solution Preview

Q = 400-0.5P, rearranging this equation in terms of Q we get
P = 800 - 2Q

TR = P*Q
TR = 800Q - 2Q2

Marginal revenue is the first ...

Solution Summary

Solution contains answer and explanation of a MCQ.