Question

11. The Miller Corporation makes two products; paper and cardboard. The relationship between t, the firm's annual profit (in thousands of dollars), and its output of each good = -80 + 50 Q1 +40 Q2-8 Q12 - 6 Q22-2 Q1Q2 where Q, is the firm's annual output of paper (in tons), and Q, is the firm's annual output of cardboard (in tons). How much paper should the Miller Corporation produce in order to maximize profit?! A. 2.766 tons. B.2.856 tons. C. 3.766 tons. D. 2.8672 tons. E. None of the above.

Answer 1

Jwn 202 260 = Di = 260 = 2.766 ay SAYA Profit is meximized when an ao and a so 076 - 50 - 2180,7 - 2002 -0 =) 50 - 100,- 202 =0 5) 202 = 50-160, =) Q2 = - 160 - 02= 25 - sos | 27 . ? = V0 - 2 C60,2 – 20,=0 =) 40 -12(25-80.)- 20,- =) 40 - 300 + 960- 20, = =) 94 di = 260 =) Dia Ou A) 2.766 tous 012 D2 2,8672 tons = 25 -8 0 = 25- 8(2.766) = 25 - 22.128 - 2.8672) 013 Elasticity of demand is always negative, 1. So, e= -3.67= Percentage change in quantity demanded a percentage change in price =) Percentage change in quantity = -3.67*(10%) y = - 36.7% As demand is elastic Th will decrease with increase in price. A Di decreased way 36.7%; decrease, 36.7% i decrease CamScanner