Question: A small firm traps rabbits for their fur and feet. Each rabbit yields one pelt and two feet (only the hind feet are used to make good-luck charms). The demand for pelts is given by

Pp = 2.00 -0.001Qp

And the demand for rabbit’s feet is given by

Pf = 1.60 -0.001Qf

The marginal cost of trapping and processing each rabbit is $0.60.

a. What are the profit-maximizing prices and quantities of pelts and rabbit’s feet?

b. If the demand for rabbit’s feet is Pf = 1.00 -0.001Qf, what are the profit-maximizing prices and rates of output?