The Lead Zeppelin Company produces powered and steerable lighter-than-air craft. The company’s airships are specially lined and are therefore safer than normal dirigibles. The table below shows the weekly production of dirigibles, along with the associated Average Cost and Total Revenue figures (the Average Cost and Total Revenue figures are actually in thousands of dollars, so the $15 represents $15,000, but we have left off the zeros to save space).
|
Quantity |
|
Total Cost |
Total Revenue |
|
0 |
-- |
0 |
$0 |
|
1 |
$15 |
15 |
$10 |
|
2 |
$9 |
18 |
$20 |
|
3 |
$8 |
24 |
$30 |
|
4 |
$8.50 |
34 |
$40 |
|
5 |
$9 |
45 |
$50 |
|
6 |
$10 |
60 |
$60 |
|
7 |
$12 |
84 |
$70 |
The Lead Zeppelin Company has decided that it will produce at least 1 dirigible. Now the question becomes, how many more dirigibles should it produce to make as much profit as possible?
Use the profit-maximizing rule to explain how many dirigibles the Lead Zeppelin Company should produce to maximize its weekly profit. Your answer should include a statement of the profit-maximizing rule and the calculations that apply it. To receive any credit on this question, you must use the profit-maximizing rule. To receive full credit on this question, you must show all of your work in the calculations.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
