Noah and Naomi can produce garden benches, garden chairs or both; they are price takers in both markets. Their cost function for garden benches is:
CB(QBQC)= 80QB + (QB)2+QBQC
and Marginal Cost = MCB=80+2QB+QC
Cost Function for Garden Chairs: CC(QBQC)=25QC+(Qc)2+QCQB
Marginal Cost: MCC=25+2QC+QB
The price of a garden bench PB=$120, the price of a garden chair PC=$60
a. What are Noah and Naomi’s profit-maximizing sales quantities of benches and chairs. Round to one decimal place and show work for Benches and Chairs. Please note that the PROFIT-MAXIMIZING SALES OF QUANTITIES OF CHAIRS is = 0. That should assist you in finding benches, respectively.
b. What is the profit-maximizing quantities if the price of benches increases to $135? Round your answers to 1 decimal place and show work.