Custom Hardwoods Produces High Quality Paneling Using a Process That

question 35

Essay

Custom Hardwoods produces high quality paneling using a process that also produces large quantities of extremely high quality sawdust. For each pallet of paneling Custom produces one cubic yard of sawdust. The demand for the paneling is:
Q_p = 350 - P_p
The demand curve for the sawdust, which can be used in various other products, is;
Q_s = 25 - .25P_s
The total cost function for the two joint products is:
TC = 7500 + 2Q + 2Q²
a. How much of each product should Custom Hardwoods sell? note - fractional units of the sawdust are permitted.)
b. What price should be charged for each product?
c. Should Custom Hardwoods withhold any of either products from the market? If so, which one and how much?

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Definitions:

Identity

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The process of reasoning and thinking through problems in a way that detaches from the emotional aspects, often used as a coping mechanism to deal with psychological stress.

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