A monopolist has two products with the following inverse demand functions?
p2 = 12-3z
tc= x^2 + 6xz + z^2.
what are the prices and output levels that maximise profits?
Please show your working..
I try to find marginal revenue by a-2bq on the two inverse demand and then adding them together, and for marginal cost I try and differentiate the total cost and then use partial derivatives, but I'm stuck on how to equate marginal cost with marginal revenue with the two variables?
Also if you can calculate the price elasticity of demand for the two products at the profit maximising price that would be helpful but not necessary.