shown in the pciture James mainly sells confectionery items, newspapers, magazines and cigarettes inhis convenience store. Noting his small business is not thriving, he thought ofselling hot pies and rolls too.Suppose the total cost function for rolls and pies is,TC = 800 + 53Q, Q = Q1+ Q2where Q1 and Q2 denote the quantities of rolls and pies respectfully. If P, and P2denote the corresponding prices, then the inverse demand equations are:Q1 = 73 – P1 and 0.5Q2= 100 – P2 a) If James decides to charge the same price for rolls and pies per day (that is,P = P2), how many of rolls and pies in total should he make in order tomaximize the profit of a particular day?b) If James decides to charge different prices as above for rolls and pies per day(that is, P1 + P2), how many of rolls and pies should he make in order tomaximize the profit of a particular day?c) Which of the above options (a) or (b) is more profitable? Provide the rationaleforyour answer.

The profit function of a firm can be viewed as the simple difference between the total revenue…

a) If James decides to charge the same price for rolls and pies per day (that is, P = P2), how many of rolls and pies in total should he make in order to maximize the profit of a particular day? b) If James decides to charge different prices as above for rolls and pies per day (that is, P, # P2), how many of rolls and pies should he make in order to maximize the profit of a particular day? c) Which of the above options (a) or (b) is more profitable? Provide the rationale for your answer.

a) If James decides to charge the same price for rolls and pies per day (that is, P = P2), how many of rolls and pies in total should he make in order to maximize the profit of a particular day? b) If James decides to charge different prices as above for rolls and pies per day (that is, P, # P2), how many of rolls and pies should he make in order to maximize the profit of a particular day? c) Which of the above options (a) or (b) is more profitable? Provide the rationale for your answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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