Julius builds dining chairs that he sells for $200 a chair. His fixed costs are $1,000 (for workshop equipment). Each chair costs him $50 in materials to produce plus an extra $25 for each previous chair made that day, which reflects Julius's increasing exhaustion. (Thus, the first chair cost $50, the second costs $75, the third cost $100, etc.) Assume time requirements in producing a chair are not a factor. How many chairs should Julius produce each day?

Question
Asked Oct 16, 2019
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Julius builds dining chairs that he sells for $200 a chair. His fixed costs are $1,000 (for workshop equipment). Each chair costs him $50 in materials to produce plus an extra $25 for each previous chair made that day, which reflects Julius's increasing exhaustion. (Thus, the first chair cost $50, the second costs $75, the third cost $100, etc.) Assume time requirements in producing a chair are not a factor. How many chairs should Julius produce each day?

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Expert Answer

Step 1

Given:

P = $200, FC=$1000, VC= $50 + $25.

Total cost = FC+ VC*q + 25 (q-1) = 1000 + 50q + 25q- 25

TC= 975 + 75q

Total Revenue = P*q = 200q

To find q le...

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