A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $2,700 and is
1 answer:
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Answer:
correct option is B. 40.5
Explanation:
given data
P = 78 - 15 Q
Q = Q1 + Q2
MC1 = 3Q1
MC2 = 2Q2
to find out
What price should be charged to maximize profits
solution
we get here first total revenue and marginal revenue that is
total revenue TR = P × Q .......1
total revenue TR = 78Q - 15Q²
and
marginal revenue MR =
marginal revenue MR = 78 - 30Q
now we get here
marginal revenue MR = MC1 = MC2
put here value
78 - 30Q1 - 30Q2 = 3 Q1 or 33 Q1 = 78 - 30Q2 ......................................a
78 - 30 Q1 - 30 Q2 = 2 Q2 or Q2 = 78 - 30Q1/32 ................................b
by equation a and b we get here
33 Q1 = 78 - 30 (78 - )
so here Q1 = 1 and
Q2 = 78 -
Q2 = 1.5
so that Q will be
Q = Q1 + Q2
Q = 1 + 1.5
Q = 2.5
now we get value of P that is
P = 78 - 15 Q
P = 78 - 15 (2.5)
P = 40.5
so charged to maximize profits is 40.5
so correct option is B. 40.5