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Refer to the Following:
a Firm Sells Two Goods (X

Question 8

Multiple Choice

Refer to the following:
A firm sells two goods (X and Y) that are related in consumption. The estimated inverse demand and cost functions are:

PX=1050.5QX0.75QYPY=120QY0.5Q2MCX=10+0.25QXMCY=16+0.5QY\begin{array} { l } P _ { X } = 105 - 0.5 Q _ { X } - 0.75 Q _ { Y } \\P _ { Y } = 120 - Q _ { Y } - 0.5 Q ^ { 2 } \\M C _ { X } = 10 + 0.25 Q _ { X } \\M C _ { Y } = 16 + 0.5 Q _ { Y }\end{array}
-What are the profit-maximizing levels of output for the two goods?


A) QxQ _ { x } = 6, QYQ _ { Y } = 3
B) QxQ _ { x } = 40, QYQ _ { Y } = 40
C) QxQ _ { x } = 58, QYQ _ { Y } = 30
D) QxQ _ { x } = 240, QYQ _ { Y } = 270
E) none of the above

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