A company manufactures two different products. Its revenue function is given by R = 45q1 + 3092 and the cost function by C = 9² +9192 +9²2 where 9₁ and q2 are the amounts produced and sold of the two products. The budget is 336 monetary units and is spent entirely. (a) Determine the amounts for both products that yield maximal revenue (and, hence maximal profit) (b) What is, approximately, the effect of increasing the budget from 336 to 337? So, is it a good idea for the company to raise its budget? (i.e., will such a move increase the profit made?) (c) Same question as in part b, but if the original budget is 756 monetary units instead of 336: will an increase in the budget lead to an increase in the profit?

A company manufactures two different products. Its revenue function is given by R = 45q1 + 3092 and the cost function by C = 9² +9192 +9²2 where 9₁ and q2 are the amounts produced and sold of the two products. The budget is 336 monetary units and is spent entirely. (a) Determine the amounts for both products that yield maximal revenue (and, hence maximal profit) (b) What is, approximately, the effect of increasing the budget from 336 to 337? So, is it a good idea for the company to raise its budget? (i.e., will such a move increase the profit made?) (c) Same question as in part b, but if the original budget is 756 monetary units instead of 336: will an increase in the budget lead to an increase in the profit?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter11: Price And Output Determination: Monopoly And Dominant Firms

Section: Chapter Questions

Problem 9E

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