Table 14-7
Sally owns the only shoe store in town.She has the following cost and revenue information.

-Refer to Table 14-7.Sally will maximize her profits by selling
A) 3 pairs of shoes.
B) 4 pairs of shoes.
C) 6 pairs of shoes.
D) 7 pairs of shoes.

Question

Table 14-7
Sally owns the only shoe store in town.She has the following cost and revenue information.
 
-Refer to Table 14-7.Sally will maximize her profits by selling
A) 3 pairs of shoes. 
B) 4 pairs of shoes. 
C) 6 pairs of shoes. 
D) 7 pairs of shoes.

Quizplus · Accepted Answer

Sally's profit will be maximized by selling the quantity of shoes that generates the highest profit. According to the table, the total cost of producing 6 pairs of shoes is $80 ($40 fixed cost + $40 variable cost), and the total revenue from selling 6 pairs of shoes is $120. Therefore, the profit from selling 6 pairs of shoes would be $40 ($120 revenue - $80 cost). This is the highest profit compared to other options, as profits decrease with both fewer and greater sales. Therefore, selling 6 pairs of shoes is the best choice for maximizing Sally's profit.

Table 14-7 Sally Owns the Only Shoe Store in Town.She Has the Has