Table 16-5
Traci's Hairstyling is one salon among many in the market for hairstyling.The following table presents cost and revenue data for hair cuts at Traci's Hairstyling.

-Refer to Table 16-5.At the profit-maximizing quantity,what is Traci's total profit?

Question

Table 16-5
Traci's Hairstyling is one salon among many in the market for hairstyling.The following table presents cost and revenue data for hair cuts at Traci's Hairstyling.
 
-Refer to Table 16-5.At the profit-maximizing quantity,what is Traci's total profit?

Quizplus · Accepted Answer

To find the profit-maximizing quantity, we need to find the quantity where marginal revenue equals marginal cost. From the table, we see that at a quantity of 7 haircuts, the marginal revenue is $59 and the marginal cost is $25. Thus, the profit from each of the 7 haircuts is $34 ($59 - $25), and the total profit is $238 ($34 x 7). Therefore, Traci's total profit is $84 ($238 - $154 in total costs).

Table 16-5 Traci's Hairstyling Is One Salon Among Many in the Market