Profit Answers
This graph shows the marginal cost of producing each bike. Select the correct answer from the options available.Based on this graph, which bike has a marginal cost of $20?
⇒ 80
80
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20
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50
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60
Using this table, calculate the profit at each level of bicycle production.
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3
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40
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70
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90
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90
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80
This graph shows the marginal costs of each bike, along with the market price. Select the correct answer from the options available.Based on this graph, at which level of production does the producer’s profit stop increasing?
Write three to five sentences explaining which levels of production provide Alonzo’s Cycling with the maximum profit.
Alonzo’s Cycling achieves maximum profit at the level of production where marginal revenue equals marginal cost. At this point, the cost of producing one additional unit is exactly offset by the revenue it generates, maximizing the gap between total revenue and total cost. If the business produces more than this amount, the cost of making each extra bicycle exceeds the revenue gained, leading to lower total profits. Therefore, staying at the point where marginal revenue and marginal cost are equal ensures the highest possible financial return.
Which of these arguments did you include in your response? Check all that apply.
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