Homework Assignment $1$

ECON $3125$ SP$24$

You must include all your work to earn points.

Name:

$3.$ Swedish Automobiles Are the Best $($SAAB$)$ sells two types of vehicles: a truck and a car. The monthly inverse demand or price equation for trucks is estimated as $P_t=65-0\mathrm{.}05Q_t($where $Q_t$ is the number of trucks sold and $P_t$ is the price per truck in thousands$).$ For cars is: $P_c=55-0\mathrm{.}1Q_c.$ It costs SAAB $$27($thousand$)$ to produce each additional truck and $$21($thousand$)$ to produce each additional car, so $M{C}_t=27$ and $M{C}_c=21.$ Assume no fixed cost so $TC=MCQ.$

State the total profit equation AND marginal profit for trucks:

$2$ points

Determine the profit$-$maximizing output for trucks $(Q_t)$ and compute the total profit that SAAB will earn from selling this quantity of trucks:

$2$ points

State the total profit equation AND marginal profit for cars:

$2$ points

Determine the profit$-$maximizing output for cars $(Q_c)$ and compute the total profit that SAAB will earn from selling this quantity of cars:

$2$ points