Chapter 12 Pricing Practices

# 86a firm produces two products a and b jointly every

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86.A firm produces two products (A and B) jointly. Every time a unit of A is produced, a unit of B is also produced as a byproduct. The demand functions for A and B are: Q A = 400 – 4 P A Q B = 100 – 2 P B Assuming that disposal is costless, determine the number of units of A and B that the firm should produce, the number of units of A and B that the firm should sell, and the price that should be charged for each of the products if the firm's marginal cost of producing a unit of joint output is: (i) MC = 100 + Q (ii) MC = 0.125 Q 87.A firm produces two products (A and B) jointly. Every time a unit of A is produced, a unit of B is also produced as a byproduct. The demand functions for A and B are: Q A = 3000 – 20 P A Q B = 1000 – 10 P B Assuming that disposal is costless, determine the number of units of A and B that the firm Page 14

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should produce, the number of units of A and B that the firm should sell, and the price that should be charged for each of the products if the firm's marginal cost of producing a unit of joint output is: (i) MC = 70 + 0.30 Q (ii) MC = 10 + 0.04 Q 88.A firm manufactures a product that is sold on two different markets (A and B) that have the following demand functions: Q A = 100 – 0.50 P A Q B = 60 – 0.50 P B The firm has the following marginal cost function: MC = 20 +0.80 Q If the firm is engaging in price discrimination, what prices should be charged on each market and how many units should be sold on each market? 89.A firm manufactures a product that is sold on two different markets (A and B) that have the following demand functions: Q A = 400 – 2 P A Q B = 240 – 2 P B The firm has the following marginal cost function: MC = 20 + 0.20 Q If the firm is engaging in price discrimination, what prices should be charged on each market and how many units should be sold on each market?
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