2

Suppose that a convenience store sells peanut butter (p) and jelly (j). The store knows that demand for the 2 goods can be expressed as: Qp = 24 - 2P p - 2Pj Qj = 18 - 3Pj - P p The store can purchase these goods from wholesalers at a constant marginal cost of 3 for peanut butter and 2 for jelly. A. Find the optimal prices for the store to charge. B. Note the price of jelly versus its marginal cost. What is weird about this, and how can it be explained?