Sara's Sensible Critters Makes Two Kinds of Catnip Toys: Balls

question 72

Short Answer

Sara's Sensible Critters makes two kinds of catnip toys: balls (x1) and mice (x2). The relationship between demand and price for balls and mice is:
x₁ = 1800 - 150p₁
x₂ = 1500 - 300p₂
The cost for a catnip ball is $2 and for the mouse, $3.
Sara has only 200 ounces of catnip on hand. A ball uses a tenth of an ounce and a toy mouse uses one-quarter of an ounce.
-Determine the prices that Sara should charge to maximize profit.

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Definitions:

Economic Policy

Actions taken by governments or central banks to influence the economy, including decisions on monetary policy, fiscal policy, and regulatory measures.

Recession

A sharp drop in the overall economic activities, enduring more than a couple of months, commonly reflected in key metrics including real GDP, real income, job numbers, output of the industrial sector, and transactions in the wholesale and retail markets.

Recessionary Gap

A situation where actual economic output is lower than the potential output, indicating underutilized resources and unemployment.

Potential GDP

The highest level of economic output that an economy can sustain over a long period without causing inflation.