Question: The total cost and demand functions for two goods 1 and 2 are given by the equations: TC = 10 + 4Q +6Q2, P

The total cost and demand functions for two goods 1 and 2

The total cost and demand functions for two goods 1 and 2 are given by the equations: TC = 10 + 4Q +6Q2, P = 8-2Q and P = 20-0.5Qz where P and P are the prices of the first and second goods, respectively. (a) Write down the equations for (i) the total revenue and (ii) profit. (6 marks) (b) Determine the number of units of each good which should be sold to maximise revenue. Calculate the maximum revenue. (6 marks) (c) Determine the number of units of each good which should be sold to maximise profits. Calculate the maximum profit. (6 marks) (d) Calculate the price elasticity of demand at maximum revenue and maximum profit for each good. Comment. (7 marks)

Step by Step Solution

★★★★★

3.42 Rating (161 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Surprise! Jamie Lee and Ross were stunned to find that their family of two has grown to a family of five! They were expecting twins, but when the babies were born, they discovered that they were...

The Hampshire Company manufactures umbrellas that sell for $12.50 each. In 2014, the company made and sold 60,000 umbrellas. The company had fixed manufacturing costs of $216,000. It also had fixed...

The Savannah Shirt Company makes two types of T-shirts: basic and custom. Basic shirts are plain shirts without any screen printing on them. Custom shirts are created using the basic shirts and then...

The Jacksonville Shirt Company makes two types of T-shirts: basic and custom. Basic shirts are plain shirts without any screen printing on them. Custom shirts are created using the basic shirts and...

Question 1 A 5-year government bond valued at 1,000 is purchase when the market rate of interest is 8%. a) Calculate the annual repayment (value of the coupon) made to the investor at the end of...

Question 2 The total cost and demand functions for two goods and 10, are given by the equations: and where Pand are the prices of the first and second goods respectively. (a) Write down the equations...

Give correct answers please... Problems 1. A monopoly faces a market demand curve given by P = 42 - Q. Its marginal cost curve is given byMC = Q. a. What is the equation for the marginal revenue?...

Assist i dont know how to go about it Problem Set 6 1. (10 points) In Cambridge, shoppers can buy apples from two sources: a local orchard, and a store that ships apples from out of state. The...

THanks in advance. Here we will examine how to go from a utility function to indifference curves. Here are three utility functions: 1- Ulirlaml = x/Ilx/I 2. U (931, 1'2] = 5131 + 2172 3. U(:r1,$2] =...

A. Exercise 1 - Slutsky equation 1. Assume there are two goods, 1 and 2. Illustrate graphically the Slutsky decomposition of a decrease in the price of good 1 under the assumption that it is a normal...

The Keynesian approach is to understand, explain and anticipate the behaviour of total expenditure. This is accomplished by dividing total expenditure into different components of expenditure. If one...

An experiment is performed to define the relationship between applied stress and the time to fracture for a type of stainless steel. Eight different values of stress are applied, and the resulting...

Peterson Electronics uses a decentralized collection system whereby customers mail their payments to one of six regional collection centers. The checks are deposited each working day in the...

When an insured purchased her disability income policy, she misstated her age to the agent. She told the agent that she was 3 0 years old, when in fact, she was 3 7 . If the policy contains the...

Big Daddy Ltd. is a company that manufactures an abdominal exerciser called The DadBod Toner. The following information is for three of the company's activities in 2018: Rate per Output unit/Batch...

Which of the following is a forward-looking disclosure? Notes to the financial statements. Audit report Management's discussion and analysis. Remuneration Report

The EnTaRe charity was established in 1960. The charity's aim is to provide support to chilidren from disadvantaged backgrounds who wh to ake part in sports such tenns badminton and football EnTaRe...

Simtek projects year-end EBIT of $800M which is expected to grow at 5% annually, and capital expenditures will equal depreciation. Simtek has $4,590M of 6% perpetual debt trading at face value and no...

x-1 3 Shortest distance between the lines z-1 x-2 y-3 z-4 and 1 1 is 1 1 - 2 -3 z-4 and -k y-4 z-5 33. The lines 1 are coplanar and sum of all values of k isB 1 k th B+4= 34. If a straight line is...

Let Dbe the parallelogram bounded by the lines y=12x,y=12x+2,y=3x andy=3x-4. Make an appropriate change-of-variables and evaluateDxydxdy

In our treatment of leisure/consumption tradeoffs, we have assumed that you are deriving income solely from wages. A: Suppose now that your grandparents set up a trust fund that pays you $300 per...

In our development of consumer theory, we made a big point about the fact that neoclassical economics does not put much stock in the idea of cardinally measuring utility (in terms of units of...

Suppose that you have 60 hours per week of leisure time and that you can earn $25 per hour in the labor market. Part of the reason you do not have more time to work is that you need to do a variety...

In three successive years the price of the common shares of Abysmal Resources Ltd. fell 35%, 55%, and 80%, ending the third year at 75 cents. a. What was the share price at the beginning of the...

For an investment to double in value during a 10-year period, a. What annually compounded rate of return must it earn? b. What semiannually compounded rate of return must it earn? c. What monthly...

Is it possible for a capital loss to be worse than -100%? Explain or give an example.