A company produces chairs and wood chips in fixed proportions in the same or joint production...

A company produces chairs and wood chips in fixed proportions in the same or joint
production process : every chair produces one kg of wooden chips
 Q function for chairs: Q c = 1800 – 20 Pc
 Q function for wooden chips: Q w = 900- 1000 Pw
 MC is Rs. 25 per unit of production – that is one chair + 1 kg chips
 Will it be profitable to sell all the wood chips?
(i) What is the maximum Q of wood chips that must be sold?
(ii) what can be done with the rest of the wood chips?
(iii) Which is the profit-maximizing point of Q for the producer?
(iv) What will be the price of wood at the equilibrium quantity?

Expert Solution

Rahul Sunny answered 2 years ago

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