Multiple choice

The cost function for a product in a firm is given by 5q2, where q is the amount of production. The firm can sell the product at a market price of Rs. 50 per unit. The number of units to be produced by the firm such that the profit is maximized is

  1. 5

  2. 10

  3. 15

  4. 25
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A Correct answer
Explanation

Profit = Revenue - Cost = (Price * q) - (5 * q^2) = 50q - 5q^2. To maximize profit, take the derivative with respect to q and set to zero: 50 - 10q = 0, so q = 5.

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