Peter Morgan sells pigeon pies from his pushcart in Central Park.Due to the abundant supplies of raw materials, his costs are zero.The demand schedule for his pigeon pies is p(y)= 80 - y/4.What level of output will maximize Peter's profits?
A)164
B)480
C)32
D)320
E)None of the above

Question

Quizplus · Accepted Answer

To maximize profits, Peter needs to find the output level where marginal revenue equals marginal cost. Since his costs are zero, we look for the output level that maximizes revenue. The demand schedule is given by $p(y) = 80 - \frac{y}{4}$. To find the revenue, we multiply price by quantity, $R = p(y) \times y = (80 - \frac{y}{4})y$. To maximize revenue, we take the derivative of the revenue function with respect to y and set it to zero: $\frac{dR}{dy} = 80 - \frac{2y}{4} = 0$. Solving for y does not directly yield any of the given options, indicating that the correct answer must be evaluated based on understanding that none of the provided options directly result from this calculation, hence the correct choice is "None of the above."

Peter Morgan Sells Pigeon Pies from His Pushcart in Central