A firm faces the price-demand relation dollars per unit and incurs a cost of dollars…

MATHEMATICS · Single correct · CBSE · Mathematics · Applications of Derivatives · Applications of Derivatives

Problem

A firm faces the price-demand relation

p(q)=90-q

dollars per unit and incurs a cost of

C(q)=15q+200

dollars to produce

q

units. A per-unit tax of

10

dollars is imposed on the firm, effectively increasing its cost by

10

for each unit sold. At what production level should the firm now operate to maximize profit? (a)

q=37.5

(b)

q=42.5

(c)

q=32.5

(d)

q=35