What size has the higher mark up

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An appliance manufacturer produces two models of refrigerators: small dorm-room size 4 cu ft (cubic feet) and small family size 8 cu ft. It costs $200 to produce a unit of 4 cu ft. Cost of producing a unit of 8 cu ft is $300. It is estimated that the demand functions for each model is

Q1:= 7500 - 40 P1 + 25P2

Q2:= 8000 + 20 P1 - 30 P2

where Q1 and Q2 are the quantity demanded and P1 and P2 are the prices of first and second model. Determine the quantity/price combination of models that maximizes the producer's profit. What size has the higher mark up?

Reference no: EM13877512

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