Assume That Turbo Is a Firm That Produces Two Kinds

Essay

Assume that Turbo is a firm that produces two kinds of flash-memory drives. Its deluxe model has the inverse demand equation: P_D = 70 - .05Q_D, where QD is the number of units sold per week. For its economy model, the price equation is: P_E = 30 - .05Q_E. Turbo's marginal cost is $10 per unit for either drive, and it produces both on a single assembly line that has a maximum capacity of 875 drives per week.
(a) Determine the profit-maximizing outputs and prices of the drives.
(b) Suppose demand for the economy drive increases to: PE = 50 – .04QE. What are the profit-maximizing outputs and prices of the drives?