A company sells two products which are partial substitutes for each other, such as

Chapter 8, Problem 37

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A company sells two products which are partial substitutes for each other, such as coffee and tea. If the price of one product rises, then the demand for the other product rises. The quantities demanded, q1 and q2, are given as a function of the prices, p1 and p2, by q1 = 5173.5p1+0.8p2, q2 = 7704.4p2+1.4p1. (a) Write total sales revenue as a function of p1 and p2. (b) What prices should the company charge in order to maximize the total sales revenue?15

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