An apiary is located next to an apple orchard.The apiary produces honey and the apple orchard produces apples.The cost function of the apiary is C_H(H, A)= H ²/100 - 1A and the cost function of the apple orchard is C_A(H, A)= A²/100, where H and A are the number of units of honey and apples produced respectively.The price of honey is $5 and the price of apples is $6 per unit.Let A₁ be the output of apples if the firms operate independently, and let A₂ be the output of apples if the firms are operated by a single owner so as to maximize total profit. A)A₁ = 300 and A₂ = 350. B)A₁ = A₂ = 300. C)A₁ = 175 and A₂ = 300. D)A₁ = 150 and A₂ = 300. E)A₁ = 250 and A₂ = 300.

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The correct answer is A because the apiary's cost function is C_H(H, A)= H ²/100 - 1A and the apple orchard's cost function is C_A(H, A)= A²/100. The price of honey is $5 and the price of apples is $6 per unit. If the firms operate independently, the output of apples will be A₁ = 300. If the firms are operated by a single owner so as to maximize total profit, the output of apples will be A₂ = 350.

An Apiary Is Located Next to an Apple Orchard