Answer to Question #280886 in Economics of Enterprise for hassan

Question

The total cost function of a monopolistic producer of two goods is TC = 3x + xy + 4y, where x and y denote the number of units of good 1 and good 2, respectively.

If p₁ and p₂ denote the corresponding prices, then the demand function of each good is p₁ = 60 − x + y and p₂ = 40 + 2x − y. Find the maximum profit if the firm is contracted to produce a total of 200 goods.

A) x = 198.250, y = 201.750 ; B) x = 255.500, y = 244.500;

C) x = 102.625, y = 97.375 ; D) x = 56.750, y = 43.250 [0.6 points]

Estimate the change in the optimal profit if the production quota rises by one unit.

Answer 1

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