Question

A company manufactures two types of wedding dresses, mermaid and ballroom style, with different profits and time requirements for designing, cutting, and sewing. Given the constraints on available hours for each activity, what is the maximum profit the company can achieve?

a) N$4800
b) N$5250
c) N$5600
d) N$6000

Answer 1

To find the profit-maximizing quantity, calculate the total revenue, marginal revenue, total cost, and marginal cost for each output level. Analyze the curves and identify the quantity at which profit is maximized. The profit-maximizing quantity for AAA Aquarium Co. is four units.

Step-by-step explanation:

To find the profit-maximizing quantity, we need to calculate the total revenue, marginal revenue, total cost, and marginal cost for each output level from one to five units.

The total revenue can be calculated by multiplying the selling price by the number of units sold. The marginal revenue can be calculated by finding the change in total revenue when one additional unit is sold.

The total cost can be calculated by adding the fixed costs to the variable costs. The marginal cost can be calculated by finding the change in total cost when one additional unit is produced.

Once we have the total revenue, marginal revenue, total cost, and marginal cost for each output level, we can analyze the curves and identify the quantity at which the profit is maximized. This is the point where marginal revenue equals marginal cost.

Based on the provided data, the profit-maximizing quantity for AAA Aquarium Co. is four units.