Econometrics, economics homework help

• 1. For the following total profit function of a firm, where X and Y are two goods sold by the firm: Profit = 150X – 4X² –XY -2.5Y² +126Y -86 (a) Determine the levels of output of both goods at which the firm maximizes total profit. (b) Calculate the profit. (20 points) To work problem 4 you will need to
  a. Find the partial derivative (see p. 106) with respect each of the variables. Remember that when taking the partial derivative with respect to a variable that the other variable is treated as a constant; e.g., the partial derivative with respect to X of the expression V = 20XY is 20Y

  b. You want to find the quantities at each partial derivative (i.e., each marginal profit) are simultaneously zero. You solve these by simultaneous equations (pp, 107-108) or using substitution (pp. 108-109). Either way works but the substitution is usually the simplest.

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