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Demand for earbuds is represented by: P = 402 – 2Q The costs are $8 per set of earbuds. In order to stock earbuds, other items which average $2 in profit must be taken off the shelf. How many earbuds should you order?

Respuesta :

Answer:

Q is 98

Explanation:

Marginal (average) cost (including opportunity cost) = $8 + $2 = $10

Profit is maximized when MR = MC = 10.

P = 402 - 2Q

Total revenue (TR) = P x Q = 402Q - 2Q^2

MR = dTR/dQ = 402 - 4Q

Equating with MC,

402 - 4Q = 10

4Q = 392

Q = 98

buchinnamani208

Given maximisation equals marginal revenue= marginal cost you should order 98 earbuds.

What is marginal revenue and marginal cost?

Marginal revenue is additional revemue from additional unit of sale while marginal cost is additional cost from production of one more unit.

To find how many earbuds to order given $2 of profit in opportunity cost of the other items forgone, Marginal revenue will equal marginal cost to maximise profit with earbuds hence:

Marginal cost(MC)= $8(cost per earbuds)+$2(opportunity cost of other items)= $10

Marginal Revenue(MR)= change in total revenue(TR)/change in quantity produced

Where MR is 402-4Q

402-4Q=10

4Q=402-10

Q(Quantity required to be ordered)=392/4

Q= 98 earbuds

Please read more about Marginal revenue and marginal cost here:

https://brainly.com/question/16615264

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