A peach farmer must decide how many peaches to harvest for the world peach fair.He knows that there is a 25 percent chance that the world price will be $3,a 50 percent chance that it will be $3.50,and a 25 percent chance that it will be $4.His cost function is C(Q)= 0.05Q².The expected profit-maximizing quantity is:

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Quizplus · Accepted Answer

The expected price of peaches can be calculated by multiplying each price by its probability and summing these products: $E(price) = 0.25(3) + 0.50(3.5) + 0.25(4) = 0.75 + 1.75 + 1 = 3.5$. Given the cost function is not clearly defined due to the presence of what appears to be a formatting or typographical error, we proceed with the assumption that the profit function involves maximizing revenue (price times quantity) minus cost. Without a specific cost function to apply, we focus on the concept of expected profit maximization, which would involve setting marginal revenue equal to marginal cost. However, without clear details on the cost function, we cannot precisely calculate the quantity. Given the options and assuming a typical scenario where profit maximization occurs at a positive quantity of production, the only reasonable quantities provided are 3.5, 35, and 40. Among these, 35 could be considered a plausible quantity for maximizing expected profits in a typical agricultural production scenario, assuming the cost function allows for profit maximization at this quantity. This is a conceptual answer due to the lack of clarity in the cost function provided.

A Peach Farmer Must Decide How Many Peaches to Harvest