A firm produces two products, "r" and "s", and the production process is such that one unit of "r" is always obtained with one unit of "s". If the demand curves for "r" and "s" are estimated to be: Q_r = 75 - P_r so that MR_r = 75 - 2Q_r) and Q_s = 100 - .5P_s so that MR_s = 200 - 4Q_s) and the marginal cost of production is MC = 75 + 4Q_j, where Q_j consists of one unit of each product, the firm will maximize profits if it sells 20 units of "r" and 20 units if "j".

Question

Quizplus · Accepted Answer

The firm will maximize profits if it sells 20 units of "r" and 20 units of "s" because at this point, MR = MC for both products.

A Firm Produces Two Products, "R" and "S", and the Production