Question

The owner of ProPhone has charted the company's marginal revenue and marginal cost for its latest line of smartphones, the Blazer. Use the chart to calculate the company's profit. How many phones will ProPhone need to sell to maximize profit?

Answer 1

Profit is total revenue minus total cost. So, the profit for each row of data is:
Quantity | Profit
0 | 30 (loss)
1 | 30
2 | 160
3 | 190
4 | 260
5 | 300
6 | 310
7 | 290

The company has to produce 6 quantities to maximize profit.

Answer 2

Answer:

6 phones

Step-by-step explanation:

To calculate the profit, the total revenue is subtracted by total cost.

We will calculate the company's profit as per given chart.

Quantity of phones     Total revenue-total cost             Profit/loss

      0                                              0 - 90                              -90  (loss)

      1                                           200 - 170                             30

      2                                          360 - 200                           160

      3                                          480 - 290                           190

      4                                          600 - 340                           260

      5                                          700 - 400                           300

      6                                          810 - 500                            310

      7                                          910 - 620                            290

The profit for selling 6 phone units is 310 which is highest.

Therefore ProPhone  will need to sell six phones to maximize profit.