Question

A manufacturer sells two goods, one at a price of $1000 a unit and the other at a price of $16,500 a unit. A quantity q1 of the first good and q2 of the second good are sold at a total cost of $5000 to the manufacturer. (a) Express the manufacturer's profit, π (in thousands of dollars), as a function of q1 and q2.

Answer 1

The manufacturer's profit is π = ($1,000q1 + $16,500q2) - $5,000.

What is profit?

Profit is total revenue less total cost. Total revenue is price per unit multiplied by the total units sold.

Profit = total revenue - total cost

What is the manufacturer's profit?

Total revenue = (q1 x  $1000) + (q2 x  $16,500)

Total revenue = $1000q1 + $16,500q2

π = ($1,000q1 + $16,500q2) - $5,000

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