In Problem 2, suppose that the cost function of the honey farm is CH(H, A) = - 1A and the cost function of the apple orchard is CA(H, A) =
, where H and A are the number of units of honey and apples produced respectively. The price of honey is $2 and the price of apples is $4 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 profit-maximizing single owner.
A) .A1 = A2 = 200.
B) A1 = 100 and A2 = 200.
C) A1 = 125 and A2 = 200.
D) A1 = 200 and A2 = 250.
E) A1 = 100 and A2 = 200
Correct Answer:
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