The Miller Corporation makes two products; paper and cardboard. The relationship between p, the firm's annual profit (in thousands of dollars), and its output of each good is

p = -80 + 50 Q₁ + 40 Q₂ -8 Q₁² - 6 Q₂² -2 Q₁Q₂,

where Q₁ is the firm's annual output of paper (in tons),

andQ₂ is the firm's annual output of cardboard (in tons).

How much paper should the Miller Corporation produce in order to maximize profit?

A. 2.766 tons.

B. 2.856 tons.

C. 3.766 tons.

D. 2.8672 tons.

E. None of the above.

12. Using the information in question #11, how much cardboard should the Miller Corporation produce in order to maximize profit?

A. 2.766 tons.

B. 2.856 tons.

C. 3.766 tons.

D. 2.8672 tons.

E. None of the above.

13. The estimated price elasticity of demand for movies is 3.67. A 10% increase in its price causes its quantity demanded to ......... and total revenue to........

A. decrease by 3.67%; increase.

B. decrease by 36.7%; increase.

C. decrease by 3.67%; decrease.

D. decrease by 36.7%; decrease.

E. none of the above.

14. After a careful statistical analysis, the Chidester Company concludes that the demand function for its product is

Q =150 -2P + 0.5P_r + 0.03I,

where Q is the quantity demanded of its product, P is the price of its product, P_r is the price of its rival's product, and I is per capita disposable income (in dollars).

At present, P = $15, P_r = $18, and I = $3,000. What is the price elasticity of demand for the firm's product?

A. - 0.1730.

B. - 0.1570.

C. - 0.1370.

D. - 0.1630.

E. None of the above.