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Prot hilaximization Revisited Suppose 2 rms sell similar products in the same market. We call this a 1110me market. The demand for rm's X and
Prot hilaximization Revisited Suppose 2 rms sell similar products in the same market. We call this a 1110me market. The demand for rm's X and Y are given respectiver ox=442P, + PF and Qy=44 -2P,, + P; Let's assume a constant marginai and average cost of ii. That means that prot per unit is given by ; = P,' .3 and Q1 11.: = P} -a so Q? "1 : (Pa: '8] Qt: 311d \"if = {PF '3} Qv For example H: = (PI -8} [44 -2 P; + Pg] Solve for the P;t and P, which maximizes prot for fit-111's X and Y. Hint: The price for X will be a Motion of the price for Y and the price for Y 1will he a inction of the price for X. Putting P? on the vertical axis and P: on the horizontal axis, graph the two functions you found in {1) on the same graph
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