Use the following to answer question:
-(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The maximum profit Lenoia can make is:
A)$225.
B)$425.
C)$400.
D)$1,800.

Question

Use the following to answer question: 
-(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.The maximum profit Lenoia can make is:
A)$225. 
B)$425. 
C)$400. 
D)$1,800.

Quizplus · Accepted Answer

The maximum profit is the difference between total revenue and total cost. Total revenue is equal to price times quantity, and price is equal to marginal cost. Marginal cost is the change in total cost divided by the change in quantity. From the table, we can see that marginal cost is $225 when quantity is 10. Therefore, the maximum profit is $225.

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