Homework SourseOnce you calculate total profit what is the profit maximizin
Once you calculate total profit, what is the profit maximizing price?
| Profit Maximization | |||||
| Gallons sold per day | Price | Revenue (price x gallons) | Marginal cost (cost per unit x volume) | Fixed cost per day | Profit (revenue - all costs) |
| 3,200 | $2.469 | $7,900.80 | $7,510.40 | $50 | $340.40 |
| 3,600 | $2.459 | $8,852.40 | $8,449.20 | $50 | $353.20 |
| 4,000 | $2.449 | $9,796.000 | $9,388.00 | $50 | $358.000 |
| 4,400 | $2.439 | $10,731.60 | $10,326.80 | $50 | $354.80 |
Solution
Form the table, it can be seen that Total profit is computed as Revenue- Total marginal cost- Fixed cost.
$358 is the highest total profits
Hence $2.449 is the profit maximizing price.
