Question

If a certain individual buys a batch of jeans at the price of 10 yuan per piece, and the demand function of the jeans is q=40p, what is the selling price of the jeans, and can the individual obtain the maximum profit?

A. Selling price is 400 yuan, and yes, the individual can obtain the maximum profit.

B. Selling price is 10 yuan, and no, the individual cannot obtain the maximum profit.

C. Selling price is 40 yuan, and yes, the individual can obtain the maximum profit.

D. Selling price is 400 yuan, and no, the individual cannot obtain the maximum profit.

Answer 1

The information provided is insufficient to accurately determine the selling price that yields maximum profit for the jeans, as we need the cost function to find where marginal revenue equals marginal cost.

Step-by-step explanation:

The student's question centers around determining the selling price of jeans and whether it would result in maximum profit given a demand function. From the provided information, the demand function is q = 40p, where q represents the quantity demanded and p the price per unit.

To find the selling price that maximizes profit, one would look for the price at which marginal revenue (MR) equals marginal cost (MC). In this scenario, the individual buys the jeans for 10 yuan each, but without additional cost information, one cannot directly determine MC.

Using the logic from the example of Authentic Chinese Pizza that determines an output of 40 units at a price of $16 to maximize profit (where MR=MC), we apply this to our case. Since the demand function is linear and of the form q = 40p, the profit-maximizing quantity must be found at the point where the MC equals MR.

However, the information is incomplete since we do not have the cost function. Therefore, it is not possible to accurately determine the price that would yield maximum profit for the jeans simply based on the purchase price and the demand function.