Peter Morgan sells pigeon pies from his pushcart in Central Park.Due to the abundant supplies of raw materials, his costs are zero.The demand schedule for his pigeon pies is p(y) = 150 - y/3.What level of output will maximize Peter's profits?

A) 225
B) 45
C) 450
D) 675
E) None of the above

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Final Answer : A, Explanation :   Peter's profit is given by:  π = p ( y ) y − 0 = ( 150 − y / 3 ) y = 150 y − y 2 / 3 \pi = p(y)y - 0 = (150 - y/3)y = 150y - y^2/3 π = p ( y ) y − 0 = ( 150 − y /3 ) y = 150 y − y 2 /3  To maximize profit, we take the derivative of profit with respect to output and set it equal to zero:  d π d y = 150 − 2 y / 3 = 0 \frac{d\pi}{dy} = 150 - 2y/3 = 0 d y d π ​ = 150 − 2 y /3 = 0  Solving for y, we get:  y = 225 y = 225 y = 225  Therefore, Peter should produce 225 pigeon pies to maximize his profits.

Peter Morgan sells pigeon pies from his pushcart in Central Park.Due to the abundant supplies of raw materials, his costs are zero.The demand schedule for his pigeon pies is p(y) = 150 - y/3.What level of output will maximize Peter's profits?

A) 225
B) 45
C) 450
D) 675
E) None of the above

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Peter Morgan sells pigeon pies from his pushcart in Central Park.Due to the abundant supplies of raw materials, his costs are zero.The demand schedule for his pigeon pies is p(y) = 150 - y/3.What level of output will maximize Peter's profits?A) 225B) 45C) 450D) 675E) None of the above

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Learning Objectives

Learning Objectives

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Peter Morgan sells pigeon pies from his pushcart in Central Park.Due to the abundant supplies of raw materials, his costs are zero.The demand schedule for his pigeon pies is p(y) = 150 - y/3.What level of output will maximize Peter's profits?

A) 225
B) 45
C) 450
D) 675
E) None of the above