Not sure how to do this! I think it might have something to do with break-even

[TrueTears]

The cost ($) of making n apple pies is given by the equation C= 1.5*n +20.

The profit from the sale of 80 apple pies is $100.

The selling price of one apple pie is:

A - $1.50

B - $1.75

C - $2.50

D - $2.75

E - $3.75

Can you please tell me how you arrive at an answer?

Thanks in advance if you can help out!

assuming profit is economic profit then where is the economic profit function, if profit is business profit, then we deduct another function OC(q) which is the opportunity cost function.

Since we don't have information on what the revenue function is, then let R(q) = F(q) such that F(0) = 0

F(80) - 1.5(80) - 20 = 100

F(80) = 240

So the most we can deduce is that our revenue function satisfies F(0) = 0 and F(80) = 240 and assume that R(q) = P(q)q, we calculate the marginal revenue to be , assuming we are in a perfectly competitive market where the apple seller is a price taker, then we have P'(q) = 0 so R'(q) = P(q).

Thus we show that marginal revenue here is indeed the price of 1 apple, note that the price of 1 apple could change at different quantities.

To get an idea of what the price of 1 apple could be, consider the revenue vector space , it can be easily shown that it depends on the price elasticity of demand (), where we have . Now it can be seen that the more elastic the demand, the more that marginal revenue and price converge, clearly in a perfectly elastic market (which would most likely be the case since apples should have a high degree of elasticity), we would expect convergence of marginal revenue and price (simply just )