A Firm Sells Two Goods (X and Y)that Are Related

question 13

Multiple Choice

A firm sells two goods (X and Y) that are related in consumption.The estimated demand and cost conditions are: $$\begin{array} { l } P _ { X } = 20 - 0.1 Q _ { X } - 0.05 Q _ { y } \\P _ { y } = 70 - 0.3 Q _ { y } - 0.1 Q _ { X } \\M C _ { X } = 1 + 0.1 Q _ { X } \\M C _ { y } = 2 + 0.25 Q _ { y }\end{array}$$ What are the profit-maximizing prices for the two goods?

• A) \(P _ { X }\) = $25.60, \(P _ { y }\) = $20.50
• B) \(P _ { X }\) = $30, \(P _ { y }\) = $35
• C) \(P _ { X }\) = $50, \(P _ { y }\) = $45
• D) \(P _ { X }\) = $11.20, \(P _ { y }\) = $42.70

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Definitions:

Stock Split

A corporate action that increases the number of a corporation's outstanding shares by dividing each share, which may lower the stock price and make shares more affordable to investors.

Market Value

The present cost at which a service or asset is available for purchase or sale on the open market.

Stock Price

The cost at which a share of stock is bought or sold in the market, influenced by various economic factors.

Stock Split

A corporate action whereby a company increases the number of its shares to reduce the price of each share, making them more affordable to investors without changing the shareholders' equity.