Question

The marginal revenue of green ink pads is given as​ follows: MR​ = 2500minus5Q The marginal cost of green ink pads is 5Q. Refer to Scenario 7. How many ink pads will be produced to maximize​ revenue?

A. 0
B. 500
C. 300
D. 250

Answer 1

The correct answer is option B.

Step-by-step explanation:

The marginal revenue of green ink pads is given as,

MR = 2500 - 5Q

The marginal cost of the green ink pads is 5Q.

The total revenue will be maximized at the point where the marginal revenue earned from an additional unit will be zero.

MR = 0

2500 - 5Q = 0

2500 = 5Q

Q =
`(2500)/(5)`

Q = 500

So the revenue maximizing level of output will be 500 units.