A firm produces two different kinds of a commodity, labelled A and B. The total daily cost of producing x units of A and y units of B is C(x, y) = 2x2 - 4xy + 4y2 - 40x - 20y + 514 Suppose that the firm sells all its output of each kind of good at a price per unit of $24 for A and $12 for B. (a). Find the profit function and the daily production levels x and y that maximize profit. (b). The firm is required to produce exactly 54 units per day of the two kinds combined. What is the optimal production plan now? (Hint: find the constraint, express one of the variables, insert it into the profit function, and solve) (c) Will this optimal plan yield maximum profits? Explain and show if needed. 7. Suppose that the inverse demand curve for a commodity is P = f(Q) = 50 - 0.2Q and the inverse supply curve is P = g(Q) = 0.2Q + 20. Compute the consumer surplus.

Answer rating: 100% (QA)

a Profit Revenue Cost Revenue from A 24x Revenue from B 12y Cost function given is Cx y 2x2 4... View the full answer