The Cost of Producing X Units of a Certain Commodity $C ( x ) = 3 x ^ { 2 } + 5 x + 5$

question 12

Multiple Choice

The cost of producing x units of a certain commodity is $C ( x ) = 3 x ^ { 2 } + 5 x + 5$ dollars.If the price is p(x) = (41 - x) dollars per unit,determine the level of production that maximizes profit.

• A)x = 3
• B)x = 1
• C)x = 5
• D)x = 2

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Definitions:

Externality

A consequence of an industrial or commercial activity which affects other parties without this being reflected in market prices.

Property Rights

Legal rights to use, control, and benefit from a resource.

Free-Rider Problem

A situation where individuals consume a public good without contributing to its cost, leading to underprovision or overuse.

Coase Theorem

A principle that asserts that if property rights are clearly defined and transaction costs are low, private negotiations will lead to the efficient resolution of disputes regardless of initial distribution of rights.