Suppose a firm’s profit function is twice-differentiable with respect to the quantity…
MATHEMATICS · Single correct · AP · Calculus AB · Analytical Applications of Differentiation · Analytical Applications of Differentiation
Problem
Suppose a firm’s profit function P(q) is twice-differentiable with respect to the quantity q produced and sold. If the marginal revenue equals the marginal cost at q=q0 and P′′(q0)<0, which of the following is the most accurate conclusion about the profit at q0?
(a) q0 yields a point of inflection of P.
(b) q0 yields a relative maximum of P.
(c) Profit is increasing for all q>q0.
(d) q0 yields a relative minimum of P.