A store has been selling skateboards at the price of $40 per board, and at this price, skaters have been buying 50 boards a mont
h. The owner of the store wishes to raise the price and estimates that for each $1 increase in price, 3 fewer boards will be sold each month. If each board costs the store $25, at what price should the store sell the boards in order to maximize profit?
1 answer:
Answer:
The store must keep the price of $40 per board to maximize its profit.
Explanation:
As the decrease in the quantity of boards is more representative than the increase in the price. The store best combination in quantity vs price is given at the initial point
<em><u>See chart attached </u></em>
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Answer:
B). $12
Explanation:
As per the given data, the AFC(Average Fixed Cost) for employing 25 factors of labor and 16 factors of capital would be $12.
We are given the production function,
Q =
where,
K = allotted input in short-term
Rental rate of each unit/factor(r) = $15
Wage per factor(w) = $5
As we know, the two inputs are labor, as well as, capital;
To find AFC, we need TC;
so,
TC = (Fixed cost + Variable cost)
TC = (240(15 * 16) + 125(25 * 5) = 365
Thus,
AFC = $ 12