The cost function for a product in a firm is given by 5q2, where q is the amount of production. The firm can sell the product at a market price of Rs 50 per unit. The number of units to be produced by the firm such that the profit is maximized is
(A) 5
(B) 10
(C) 15
(D) 25
Answer: (A)
Explanation:
Profit = Price - Cost
= 50q - 5q2
The above function will be maximum for the values on which its first derivative becomes 0.
50 - 10*q = 0
50 = 10 * q
q = 5.
The value of above expression is maximum at q = 5.