https://file.aiquickdraw.com/mathbot/file/17268427016872urjiq3d.jpg

Let's work through the problem shown in the image. We are given:

- **Demand curve**: \( Q = 80 - \frac{4}{3} \times P \)
- **Average Total Cost (ATC)**: \( ATC = 0.5 \times Q + 10 + \frac{1,000}{Q} \)

### Let's now break down each option:

---

### Option A: "The maximum total profit is positive"
We will need to maximize the total profit and verify whether it's positive or not. Profit is the difference between **total revenue** and **total cost**:

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

To solve this, we will first need to find expressions for total revenue (TR) and total cost (TC).

---

### Option B: "The maximum value of the total revenue function is 1,200"
To verify this, we can find the total revenue function \( TR = P \times Q \). By substituting \( P \) from the demand equation, we will check if the maximum TR is 1,200.

---

### Option C: "The profit maximizing output level is \( Q = 20 \)"
We will need to calculate the output level \( Q \) that maximizes profit. This usually involves setting the **marginal cost (MC)** equal to **marginal revenue (MR)**.

---

### Option D: "The most profitable price is \( P = 45 \)"
We need to determine the price that leads to the maximum profit and see if it equals 45.

---

### Option E: "The total cost of production is \( TC = 0.5 \times Q^2 + 10 \times Q + 1,000 \)"
We need to verify if this formula for total cost is derived correctly from the ATC.

---

Let's work through these calculations step-by-step. I'll start by deriving the total revenue, total cost, and profit functions, and then I'll analyze each option.

Here's what we've found so far:

1. **Maximum total revenue**: The maximum value of the total revenue occurs when \( Q = 40 \), and the total revenue at this point is \( 1,200 \). This confirms **Option B** as true.
   
2. **Total cost formula**: The provided total cost formula in **Option E** (\( TC = 0.5 \times Q^2 + 10 \times Q + 1,000 \)) does **not** match the total cost derived from the average total cost (ATC) function. Hence, **Option E** is **not true**.

Next, we'll compute the other values for profit and price to verify the remaining options. Would you like a detailed calculation for the remaining steps? 

Here are five related questions:

1. How is marginal cost (MC) calculated from the total cost function?
2. What is the relationship between marginal revenue and profit maximization?
3. Can profit be positive when total revenue equals total cost?
4. How can we verify that \( P = 45 \) is the most profitable price?
5. What are the key factors affecting the shape of the total cost curve?

**Tip:** The intersection of marginal cost and marginal revenue usually determines profit-maximizing output.

The demand curve facing a firm is Q = 80 - (4/3) * P and the average total cost of production is ATC = 0.5 * Q + 10 + 1000/Q. Which of the following is not true? A) The maximum total profit is positive. B) The maximum value of the total revenue function is 1,200. C) The profit-maximizing output level is Q = 20. D) The most profitable price is P = 45. E) The total cost of production is TC = 0.5 * Q^2 + 10 * Q + 1,000.

This problem involves maximizing total profit using a demand curve and average total cost function. It examines key concepts like profit maximization, total revenue, and cost functions in economics. Suitable for college-level students studying economics or business.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation