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Suppose the market for relay switches is considered perfectly competitive and is in equilibrium at a price of S5,000 per pallet of relay switches. Callahan Relay produces relay switches at an average total cost given by ATC = Q1 + 1,500,000/Q and marginal cost given by MC= 2Q, where Q measures pallets of relay switches.
1. If Callahan Relay maximizes profit, how much profit will it earn?
a. $125,000
b. $88,000
c. $2.5 million
d. $4.75 million

Respuesta :

abidhussain7972

Answer:14. P=MC for equilibrium or 5000=2Q or Q = 2500

ATC at Q = 2500, ATC = 2500+1500000/2500 = 3100

Profits = (P-ATC)*Q

= (5000-3100)*2500

= 4,750,000

OR 4.75 MILLION

Explanation:

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