-Refer to Figure 9.2.Whenever a CD is sold,5% of the sale goes to the artist and the remainder of the revenue goes to the record company.The graph above depicts this with R being the total revenue from sales,(0.95)R being the record company's share less the 5% given to the artist and C being the cost of producing the CD.At what quantity would the record company like to produce the CD?
A) 0
B) Q1
C) Q2
D) Q3

Question

-Refer to Figure 9.2.Whenever a CD is sold,5% of the sale goes to the artist and the remainder of the revenue goes to the record company.The graph above depicts this with R being the total revenue from sales,(0.95)R being the record company's share less the 5% given to the artist and C being the cost of producing the CD.At what quantity would the record company like to produce the CD?
A) 0 
B) Q1 
C) Q2 
D) Q3

Quizplus · Accepted Answer

The record company would like to produce the CD at quantity Q1 because this is the point where the cost of producing the CD (C) intersects with the revenue curve (0.95R), indicating the break-even point. Beyond this quantity, the record company starts making a profit.