The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 10.1
Refer to Table 10.1.At what level of output is total revenue maximized?

Question

The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 10.1
 Refer to Table 10.1.At what level of output is total revenue maximized?

Quizplus · Accepted Answer

To determine at what level of output total revenue is maximized, we need to multiply the output sold at each price level and then sum up the revenues. The results are as follows:

Output x Price = Revenue
1 x $60 = $60
2 x $55 = $110
3 x $50 = $150
4 x $45 = $180
5 x $40 = $200
6 x $35 = $210
7 x $30 = $210

As we can see, total revenue is maximized at an output level of 5, where the revenue is $200. Any output level above or below 5 will result in a lower total revenue. Therefore, the best choice is C) 5.

The Following Table Shows the Units of the Output Sold