Question

Please show the work. The platypus is a shy and secretive animal that does not breed well in captivity. But two breeders, Sydney and Adelaide, have discovered the secret to platypus fertility and have effectively cornered the market. Zoos across the globe come to them to purchase their output; the world inverse demand for baby platypuses is given by P = 1,000 – 2Q, where Q is the combined output of Sydney (q_S ) and Adelaide (q_A ).

a) Sydney wishes to produce the profit-maximizing quantity of baby platypus. Derive her marginal revenue.

b)Assume that the marginal and average total cost of raising a baby platypus to an age at which it can be sold is $200. Derive Sydney’s reaction function.

c)Substitute Sydney’s reaction function into Adelaide’s to solve for Adelaide’s profit-maximizing level of output. Then use your answer to find Sydney’s profit-maximizing level of output.

Answer 1