Find the profit-maximizing levels of price and output for

Reference no: EM13396503

American Export-Import Shipping Company operates a general cargo carrier service between New York and several Western European ports. It hauls two major categories of freight: manufactured items and semi manufactured raw materials.

The demand functions for these two classes of goods are

P1 = 100 - 2Q1

P2 = 80 - Q2

where Qi = tons of freight moved. The total cost function for American is

TC = 20 + 4(Q1 + Q2)

a. What are the profit-maximizing levels of price and output for the two freight categories?

b. At these levels of output, calculate the marginal revenue in each market.

c. What are American's total profits if it is effectively able to charge different prices in the two markets?

Reference no: EM13396503

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