# There are 2 firms operating in a market: X and Y. Firm X and Firm Y are to simultaneously choose...

## Question:

There are 2 firms operating in a market: X and Y. Firm X and Firm Y are to simultaneously choose quantity to be produced. Both firms have constant marginal cost cX = 10 and cY = 15. Firms face the inverse demand P = 100 - 2Q where Q is the total market quantity (i.e. Q = qX + qY ).

What is the profit maximization for each firm?

## Total utility:

Total utility means the satisfaction gain by the consumer by consuming a good. For example: When we consume ice cream, then total utility increases in the beginning then after consuming more ice cream, total utility attained reaches at its maximum (maybe after three ice creams) and at the end total utility falls (when you eat 10 ice creams and throw up).

## Answer and Explanation: 1

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{eq}P=100-2Q {/eq}

{eq}Q=q1+q2 {/eq}

{eq}MC_{1}=10 {/eq}

{eq}MC_{2}=15 {/eq}

{eq}TR_{1}=P.q_{1} {/eq}

{eq}TR_{1}=(100-2(q_{1}+q_...

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Chapter 24 / Lesson 6Learn the profit maximization definition, its importance, and explore the profit maximization theory. See how to calculate profit maximization with examples.

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