Question

The inverse demand for organic dog food is given by P₁ = 26 2Q₁ , and the inverse demand for conventional dog food is given by P₂ = 10−Q₂

, where P is the price of dog food in USD//b, and Q is the quantity of dog food in thousand pounds. The cost of producing dog food is C(Q)=2Q. The profit-maximizing quantity of conventional dog food is equal to (1000s):
(a). 3
(b).4
(c).2
(d).3

Answer 1

To determine the profit maximizing quantity of dog food, you need to analyze the total revenue, marginal revenue, total cost, and marginal cost for each output level. By comparing the marginal revenue and marginal cost, you can identify the quantity at which the firm maximizes its profit.

Step-by-step explanation:

To determine the profit maximizing quantity, we need to analyze the total revenue, marginal revenue, total cost, and marginal cost for each output level of dog food. Here is a table representing the mentioned values:

Output Level (Q)Total RevenueMarginal RevenueTotal CostMargin Cost1............2............3............4............5............

To find the profit maximizing quantity, we need to identify the output level where marginal revenue equals marginal cost. This will be the output level at which the firm maximizes its profit. Once we have this information, we can determine the corresponding quantity (Q) from the table.