Optimal Profit. Hardwood Cutters offers seasoned, split fireplace logs to consumers in Toledo, Ohio. The company is the low-cost provider of firewood in this market with fixed costs of $10,000 per year, plus variable costs of $25 for each cord of firewood. Annual demand and marginal revenue relations for the company are:

A. Calculate the profit-maximizing activity level.
B. Calculate the company's optimal profit and return-on-sales levels.

Question

Optimal Profit. Hardwood Cutters offers seasoned, split fireplace logs to consumers in Toledo, Ohio. The company is the low-cost provider of firewood in this market with fixed costs of $10,000 per year, plus variable costs of $25 for each cord of firewood. Annual demand and marginal revenue relations for the company are:
 
A. Calculate the profit-maximizing activity level.
B. Calculate the company's optimal profit and return-on-sales levels.

Quizplus · Accepted Answer

The Answer of Optimal Profit. Hardwood Cutters offers seasoned, split fireplace logs to consumers in Toledo, Ohio. The company is the low-cost provider of firewood in this market with fixed costs of $10,000 per year, plus variable costs of $25 for each cord of firewood. Annual demand and marginal revenue relations for the company are:
 
A. Calculate the profit-maximizing activity level.
B. Calculate the company's optimal profit and return-on-sales levels.