Final answer:
Option (c), The term dP/dN represents the marginal profit per unit, indicating the additional profit from selling one more unit of a product.
Step-by-step explanation:
The best interpretation of dP/dN is c) Marginal profit per unit. This derivative represents how profit changes in response to selling one additional unit of a product. In other words, it shows the additional profit earned from the sale of each additional unit. If P is the profit in thousands of dollars and N is the number of units sold, then dP/dN calculates the incremental profit attributed to selling one more unit, which might influence business decisions such as pricing and production levels.
Marginal cost is a similar concept but is concerned with the change in total cost divided by the change in quantity. Understanding both marginal profit and marginal cost is crucial for firms to determine the optimal production level and pricing strategy.
For example, if a firm produces 5 units sold at $25 each, their profit or loss is based on the total revenue versus total costs. If looking at average cost, a quick comparison with the price per unit will tell you whether the firm makes a profit: if average cost is lower than the price, the firm is profiting. Finally, if the marginal unit produced costs less than what it sells for, it adds to profits.