The table given below reports the marginal revenue and marginal cost of Holmes Detective Agency for each client. Table 8.2

- According to Table 8.2,what will be the total number of clients that will maximize profits for the Holmes Detective Agency?
A)2
B)3
C)5
D)6

Question

The table given below reports the marginal revenue and marginal cost of Holmes Detective Agency for each client. Table 8.2

- According to Table 8.2,what will be the total number of clients that will maximize profits for the Holmes Detective Agency?
A)2 
B)3 
C)5 
D)6

Quizplus · Accepted Answer

To maximize profits, the firm should produce at a quantity where marginal revenue equals marginal cost. Looking at the table, this occurs at a quantity of 6 clients. At 6 clients, marginal revenue is $200 and marginal cost is $200, resulting in a profit of $400. Producing any other quantity would result in lower profits. Therefore, the total number of clients that will maximize profits is 6.

The Table Given Below Reports the Marginal Revenue and Marginal