solution

The Mineola Corporation hires a consultant to estimate the relationship

between its profit and its output. The consultant reports that the relationship is

p = -10 – 6Q + 5.5Q2 – 2Q3 + 0.25Q4 a. The consultant says that the firm should set Q equal to 1 to maximize profit. Is it true that dp>dQ = 0 when Q = 1? Is p at a maximum

when Q = 1? b. Mineola’s executive vice president says that the firm’s profi t is a maximum

when Q = 2. Is this true? c. If you were the chief executive officer of the Mineola Corporation, would

you accept the consultant’s estimate of the relationship between profit and output as correct?