Silky inc., which sells custom silk ties designed by famous people, faces a demand curve of q = 150 – 0.2p, where q is measured in hundreds of ties and p is the price per tie. the marginal cost of production is given by mc = 5q. what is silky's profit-maximizing output level? (hint: add two zeros to the number you get.)

The production level that maximizes Silky's profit is ties.

Explanation:

Hi

First of all, as we have , we need to transcript it as price in function of the quantity so

Then we need to find income function that is .  After derivate it .

The optimum level is when we have , therefore,

, as we clear it for we find that

, finally as we have that is measured in hundreds of ties, the production level that maximizes Silky's profit is ties.