Kenny's Cartage hauls crushed stone for $15 a ton and has total costs given by TC = 100 + 5X + X².The profit-maximizing level of output is: A) 5 tons. B) 2.1 tons. C) 10 tons. D) 20 tons. E) 0 tons.

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Quizplus · Accepted Answer

To find the profit-maximizing level of output, we first need to determine the marginal revenue (MR) and marginal cost (MC) and then set MR = MC. The revenue for Kenny's Cartage is $15 per ton, so MR = $15 (since it's constant for each additional ton). The total cost (TC) is given by TC = 100 + 5X + X^2. The marginal cost (MC) is the derivative of the total cost with respect to X, which is MC = d(TC)/dX = 5 + 2X. Setting MR = MC gives 15 = 5 + 2X, solving for X gives X = 5 tons.

Kenny's Cartage Hauls Crushed Stone for $15 a Ton and Has