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GlaxoSmithKline (GSK) maximizes profit by producing a quantity of 800 pills where marginal cost is $2 and average cost is $4. Consumers are willing to pay as much as $10 per pill when the quantity supplied is 800 pills. What is the maximum amount of profit that GSK can earn under these conditions?

Respuesta :

Karabo99

Answer:

The maximum amount of profit that GSK can earn under these conditions is $6400.

Explanation:

Profit will be maximized when p = MC. GSK's MC is $2. Consumers willingness to pay is $10.

maximum profit can be earned = (10 - 2)*800

                                                   = $6400

Therefore, The maximum amount of profit that GSK can earn under these conditions is $6400.

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