Question: [Profit maximization - I]

A two product firm faces the following demand and cost functions.

\({{Q}_{1}}=40-2{{P}_{1}}-{{P}_{2}}\)

\({{Q}_{2}}=35-{{P}_{1}}-{{P}_{2}}\)

and

\(C\left( {{Q}_{1}},{{Q}_{2}} \right)=Q_{1}^{2}+2Q_{2}^{2}+10\)

1. Find the output levels \(Q_{1}^{*}\) and \(Q_{2}^{*}\) that satisfy the first order conditioned for maximum profit (use fractions).
2. Compute the maximum profit.

Price: $2.99

Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document