2.The profit function of a firm is 7(x, y) = px+qy-ax² - y², where p and q are theprices per unit and ax² + y² are the costs of producing and selling x units of the first good andy units of the second good. The constants are all positive. Find the values of x and y thatmaximize profits. Denote them by x* and y*. Verify that the second-order conditions aresatisfied.

The profit function of a firm represent the profit of firm at various level of price or inputs or…

2. The profit function of a firm is 7(x, y) = px+qy-ax²-By², where p and g are the prices per unit and ax² + y² are the costs of producing and selling x units of the first good and units of the second good. The constants are all positive. Find the values of x and y that maximize profits. Denote them by x* and y*. Verify that the second-order conditions are satisfied. y

2. The profit function of a firm is 7(x, y) = px+qy-ax²-By², where p and g are the prices per unit and ax² + y² are the costs of producing and selling x units of the first good and units of the second good. The constants are all positive. Find the values of x and y that maximize profits. Denote them by x* and y*. Verify that the second-order conditions are satisfied. y

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 7PA

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