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A firm produces two goods, Q1 and Q2. The demand function for Q1 is: Q1 = 12 - P1/3, and the demand function for Q2 = 8 - P2/5. Meanwhile, the total cost function is TC = Q1 2 + 2Q1Q2 + 3Q2 2.
a) What are the critical values, or the value of Q1 and Q2 that might maximize the profit, of this firm?
b) Use the second order condition to verify that the critical values from a) can maximize the profit of this firm.
c) What is the stationary value, or the maximized profit, of this firm?
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