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A firm produces two products A and B. The total cost function of producing “x” items...

A firm produces two products A and B. The total cost function of producing “x” items of product A and “y” items of product B is TC = 2x2 + y2 – xy – 49x + 425. Find the number of each type that should be produced to minimize the total cost if the firm is committed the producing 21 items in total.

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Answer #1

Given,

And x + y = 21

=> y = 21 - x

TC will be minimum when MC = 0

The firm should produce 14 units of product A and 7 units of product B.

Minimum TC =

X = 14 units and Y = 7 units.

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