Refer to the following: What are the profit-maximizing levels of output for the two goods?

Question

Refer to the following:  What are the profit-maximizing levels of output for the two goods?

Quizplus · Accepted Answer

The profit-maximizing levels of output occur where marginal cost equals marginal revenue for each good. Using the provided information on the graph, we can determine that this happens at a quantity of 42 for Good 1 and 100 for Good 2. Multiplying these quantities by their respective prices yields a total revenue of $7,560. However, this is not the maximum possible profit, as we still need to subtract the total cost of producing these quantities. Using the provided cost curves, we can calculate that the total cost of producing the profit-maximizing quantities is $4,390. Therefore, the maximum possible profit is $3,170, which occurs at the profit-maximizing levels of 42 and 100 for Good 1 and Good 2, respectively.

Refer to the Following: What Are the Profit-Maximizing Levels