The maximum profit based on the units that give maximum profit is $537,498.50.
We can find the maximum profit using the cost and revenue functions.
Monthly average costs equation: C = 40,000/x + 100 + x
The number of units produced per month = x
Total production units per month that give maximum profit: x = 550
Competitive market selling price per unit = $1,700
Average cost, C = 40,000/550 + 100 + 550
= $722.73
Total cost = $397,501.50 ($722.73 x 550)
Total sales revenue = 1,700(550) = $935,000
Maximum profit = $537,498.50 ($935,000 - $397,501.50)
Thus, the maximum profit is $537,498.50.
Complete Question:
A firm has monthly average costs, in dollars, given by C = 40,000/x + 100 + x where x is the number of units produced per month. The firm can sell its product in a competitive market for $1700 per unit. The number of units that give maximum profit is x = 550 Find the maximum profit.