A firm manufactures two goods labeled 1 and 2. It sells Qi items of good i for a fixed price per unit of pi. The total cost of producing good i is ciQi2.Explain briefly why the profit function is given byπ(Q1, Q2) = p1Q1 + p2Q2 − c1Q12 − c2Q22Find the values of Q1 and Q2 which maximize π and verify that the second-order conditions for a maximum are satisfied. Find an expression for the maximum profit. A firm manufactures two goods labelled 1 and 2. It sells Q; items of good i for a fixedprice per unit of p. The total cost of producing good i is c,Q}.Explain briefly why the profit function is given byT(Q,, Q2) = P,Q, + p,Q2 – c,Qi –Find the values of Q, and Q, which maximise T and verify that the second-order condi-tions for a maximum are satisfied. Find an expression for the maximum profit.

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Answered: A firm manufactures two goods labeled 1…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A firm manufactures two goods labeled 1 and 2. It sells Qi items of good i for a fixed price per unit of pi. The total cost of producing good i is ciQi2.
Explain briefly why the profit function is given by
π(Q1, Q2) = p1Q1 + p2Q2 − c1Q12 − c2Q22
Find the values of Q1 and Q2 which maximize π and verify that the second-order conditions for a maximum are satisfied. Find an expression for the maximum profit.

A firm manufactures two goods labelled 1 and 2. It sells Q; items of good i for a fixed
price per unit of p. The total cost of producing good i is c,Q}.
Explain briefly why the profit function is given by
T(Q,, Q2) = P,Q, + p,Q2 – c,Qi –
Find the values of Q, and Q, which maximise T and verify that the second-order condi-
tions for a maximum are satisfied. Find an expression for the maximum profit.

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