Table 13-4

Table 13-4 lists estimated revenues and costs (per week)for plastic vials (100 vials per box)for the Victoria Biological Supplies Company. Victoria sells plastic vials to universities and private research laboratories.
-Refer to Table 13-4.Victoria's profit-maximizing quantity (Q)and price (P)are
A)Q = 3; P = $7.
B)Q = 4; P = $6.
C)Q = 5; P = $5.
D)Q = 6; P = $4.

Question

Table 13-4
  
Table 13-4 lists estimated revenues and costs (per week)for plastic vials (100 vials per box)for the Victoria Biological Supplies Company. Victoria sells plastic vials to universities and private research laboratories.
-Refer to Table 13-4.Victoria's profit-maximizing quantity (Q)and price (P)are
A)Q = 3; P = $7. 
B)Q = 4; P = $6. 
C)Q = 5; P = $5. 
D)Q = 6; P = $4.

Quizplus · Accepted Answer

To find the profit-maximizing quantity (Q), we need to calculate the marginal revenue (MR) and marginal cost (MC) for each quantity and find where MR=MC. 
From the table, we can calculate the MR as the change in revenue divided by the change in quantity, and MC as the change in cost divided by the change in quantity.

For example, at Q=4, the MR is:
($24 - $18)/1 = $6
And the MC is:
($17 - $14)/1 = $3

We can continue this calculation for each quantity and find that MR=MC at Q=4. At Q=4, P=$6, and the profit is ($6 x 400) - ($17 x 4 x 100) = $1,200.

Therefore, the profit-maximizing quantity (Q) and price (P) for Victoria are Q=4 and P=$6.

Table 13-4 Table 13-4 Lists Estimated Revenues and Costs (Per Week)for Plastic