Profit Maximization: Equations. Steam Cleanin, Inc., offers professional carpet cleaning to home owners in Huntsville, Alabama. The company is the low-cost provider in this market with fixed costs of $168,750 per year, plus variable costs of $10 per room of carpet cleaning. Annual demand and marginal revenue relations for the company are:

A. Calculate the profit-maximizing activity level.
B. Calculate the company's optimal profit and return-on-sales levels.

Question

Profit Maximization: Equations. Steam Cleanin, Inc., offers professional carpet cleaning to home owners in Huntsville, Alabama. The company is the low-cost provider in this market with fixed costs of $168,750 per year, plus variable costs of $10 per room of carpet cleaning. Annual demand and marginal revenue relations for the company are:
 
A. Calculate the profit-maximizing activity level.
B. Calculate the company's optimal profit and return-on-sales levels.

Quizplus · Accepted Answer

The Answer of Profit Maximization: Equations. Steam Cleanin, Inc., offers professional carpet cleaning to home owners in Huntsville, Alabama. The company is the low-cost provider in this market with fixed costs of $168,750 per year, plus variable costs of $10 per room of carpet cleaning. Annual demand and marginal revenue relations for the company are:
 
A. Calculate the profit-maximizing activity level.
B. Calculate the company's optimal profit and return-on-sales levels.