Question

Sample response:Based on the data in the graphs, Alonzo's Cycling should produce five or six bikes if it wants to maximize its profits. This is because the sixth bike is the point at which the marginal revenue matches the marginal cost. The company will make $90 in profit with the sale of its fifth or sixth bike each day. After that, the profit begins to fall with each sale.

Which of these arguments did you include in your response? Check all that apply.

Profit is maximized when marginal revenue equals marginal cost.
Profit is maximized when five or six bikes are made each day.
Profit declines when more than six bikes are produced each day

Answer 1

- ✔ Profit is maximized when marginal revenue equals marginal cost.
- ✔ Profit is maximized when five or six bikes are made each day.
- ✔ Profit declines when more than six bikes are produced each day.