note: different prices above are equals:rolls:quantity of 10, at $63pies:quantity of 47, price at $76.5 d) If James decides to make a total of 51rolls and pies per day and chargesdifferent prices as above (that is, P1 # P2 ), how many of rolls and pies eachshould he make in order to maximize the profit of a particular day? Estimate theincrease in maximum profit which results when the total number of rolls and piesper day (51) is increased to 52 [note: assume second-order conditions aresatisfied]. 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

In order to optimize the production bundle when the firm charges different prices, we shall…

d) If James decides to make a total of 51rolls and pies per day and charges different prices as above (that is, P1 + P2 ), how many of rolls and pies each should he make in order to maximize the profit of a particular day? Estimate the increase in maximum profit which results when the total number of rolls and pies per day (51) is increased to 52 [note: assume second-order conditions are satisfied].

d) If James decides to make a total of 51rolls and pies per day and charges different prices as above (that is, P1 + P2 ), how many of rolls and pies each should he make in order to maximize the profit of a particular day? Estimate the increase in maximum profit which results when the total number of rolls and pies per day (51) is increased to 52 [note: assume second-order conditions are satisfied].

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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