The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 10.1

-Refer to Table 10.1.At what level of output is total revenue maximized?
A)3
B)4
C)5
D)6

Question

The following table shows the units of the output sold at different price levels by Gizmo's Inc. Table 10.1
 
-Refer to Table 10.1.At what level of output is total revenue maximized?
A)3 
B)4 
C)5 
D)6

Quizplus · Accepted Answer

Total revenue is calculated by multiplying the quantity of output sold by the price per unit. Looking at the table, at a price of $3.50, the quantity of output sold increases up to a point and then decreases. Total revenue is maximized at the point where the quantity of output sold multiplied by the price per unit is greatest. In this case, the maximum total revenue is achieved at a quantity of 5 units sold, which would generate total revenue of $17.50. Therefore, the best choice for maximizing total revenue is C)5.

The Following Table Shows the Units of the Output Sold