Question

At which price are profits minimized? Use the following chart:


Quantity Sold Price Total Costs
20 $20 $150
25 18 180
30 16 200
35 14 225
40 12 250
a. 12
b. 18
c. 16
d. 14
e. $20

Answer 1

To determine at which price profits are minimized, we need to calculate the profits for each quantity sold. Profit can be calculated as:

\[ \text{Profit} = \text{Total Revenue} - \text{Total Costs} \]

Where Total Revenue is calculated as:

\[ \text{Total Revenue} = \text{Price} \times \text{Quantity Sold} \]

Now, let's calculate the profits for each price point:

1. For **20 units at $20**:
- Total Revenue = \( 20 \times 20 = 400 \)
- Total Costs = 150
- Profit = \( 400 - 150 = 250 \)

2. For **25 units at $18**:
- Total Revenue = \( 25 \times 18 = 450 \)
- Total Costs = 180
- Profit = \( 450 - 180 = 270 \)

3. For **30 units at $16**:
- Total Revenue = \( 30 \times 16 = 480 \)
- Total Costs = 200
- Profit = \( 480 - 200 = 280 \)

4. For **35 units at $14**:
- Total Revenue = \( 35 \times 14 = 490 \)
- Total Costs = 225
- Profit = \( 490 - 225 = 265 \)

5. For **40 units at $12**:
- Total Revenue = \( 40 \times 12 = 480 \)
- Total Costs = 250
- Profit = \( 480 - 250 = 230 \)

Now, let's summarize the profits calculated:

- At $20: Profit = 250
- At $18: Profit = 270
- At $16: Profit = 280
- At $14: Profit = 265
- At $12: Profit = 230

From these calculations, we can see that the lowest profit occurs at the price of **$12**.

Thus, the answer is **a. 12**.