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enot [183]
2 years ago
11

Meteor Tie Company produces ties from fabric according to Q = 10 + 4 F – (1/3) F 3. If fabric is free and ties sell for $20, wha

t is Meteor’s optimal usage of fabric?
Business
1 answer:
Leya [2.2K]2 years ago
8 0

Answer:

The optimal usage of fabric = 2

Explanation:

Given the quantity, Q = 10 + 4F - (1/3) F^3

Selling price = $20

Profit = TR - TC

There is no variable cost and let the fixed cost is constant G.

Profit =  PQ - G  

Profit = 20(10 + 4F − (1/3)F^3)) - G = 0

Now take the first order derivative:

d(profit) / dF = 0

20(4 - F^2) = 0

F = 2

Therefore the optimal usage of fabric = 2

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