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Allen Rent-A-TV derives an average profit of $15 per customer if it services 1000 customers or less. If it services over 1000 customers, the profit decrease per customer by $.01 for each customer over
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Allen Rent-A-TV derives an average profit of $15 per customer if it services 1000 customers or less. If it services over 1000 customers, the profit decrease per customer by $.01 for each customer over 1000. How many customers will give the maximum profit?

User Nora
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Answer:

1000

Step-by-step explanation:

1000, that is the point where it reaches maximum utility, if it has more clients it incurs a higher marginal cost and therefore its utility would be lower, in microeconomics the utility function is a quadratic function, this means that it has a maximum point and from there the income continues to increase but the utility decreases due to the marginal cost, that is to say the cost of an additional unit.

User Kevinosaurio
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