A small town has two bakeries, Acme and Fat Apple. Acme's marginal cost to make a loaf of bread is $1 and Fat Apple's marginal cost is $2. Acme's demand function is given as Q₁ = 14 - P₁ -0.5P₂ and Fat Apple's demand function is Q₂ = 19 -0.5P₁ - P2 where P₁ (P₂) is Acme (Fat Apple)'s price in dollars per loaf of break and Q₁ (Q₂) is measured in thousand loaves of Amce (Fat Apple)'s bread (respectively). What is Acme's profit function? O O - P₂² +15P2-0.5P1 P2 +0.5P₁ - 14. -P₁²+15P₁ -0.5P₁P2 +0.5P2 - 14. -P₁²+10P1 -0.5P₁ P2+ 0.5P2 O + P₁²-15P₁ +0.5P1 P2 -0.5P2 + 14.

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Chapter1: Making Economics Decisions
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A small town has two bakeries, Acme and Fat Apple. Acme's marginal cost to make a loaf of bread is $1 and Fat Apple's marginal cost is $2. Acme's demand function is
given as Q₁ = 14 - P₁ -0.5P2 and Fat Apple's demand function is Q₂ = 19 -0.5P₁ - P₂ where P₁ (P₂) is Acme (Fat Apple)'s price in dollars per loaf of break and Q1 (Q2)
is measured in thousand loaves of Amce (Fat Apple)'s bread (respectively). What is Acme's profit function?
O
O
P₂² +15P2-0.5P1 P2 + 0.5P₁ - 14.
-P₁² + 15P₁ - 0.5P₁P2 + 0.5P2 - 14.
-P₁²+10P1 -0.5P1 P2 +0.5P2
O
+ P₁²-15P1 +0.5P1 P2 -0.5P2 + 14.
Transcribed Image Text:A small town has two bakeries, Acme and Fat Apple. Acme's marginal cost to make a loaf of bread is $1 and Fat Apple's marginal cost is $2. Acme's demand function is given as Q₁ = 14 - P₁ -0.5P2 and Fat Apple's demand function is Q₂ = 19 -0.5P₁ - P₂ where P₁ (P₂) is Acme (Fat Apple)'s price in dollars per loaf of break and Q1 (Q2) is measured in thousand loaves of Amce (Fat Apple)'s bread (respectively). What is Acme's profit function? O O P₂² +15P2-0.5P1 P2 + 0.5P₁ - 14. -P₁² + 15P₁ - 0.5P₁P2 + 0.5P2 - 14. -P₁²+10P1 -0.5P1 P2 +0.5P2 O + P₁²-15P1 +0.5P1 P2 -0.5P2 + 14.
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