Question: (a) A firm produces two different kinds A and B of a commodity. The daily cost of producing Q1 units of A and Q2 units of B is C(Q1 , Q2) = 0.1(Q12 + Q1Q2 + Q22) Suppose that the firm sells all its output at a price per unit of P1 = 120 for A and P2 = 90 for B. Find the daily production levels that maximize profits.
(b) If P2 remains unchanged at 90, what new price (P1) per unit of A would imply that the optimal daily production level for A is 400 units?