The Hassman Company produces two joint products, X and Y. The isocost curve corr

Question

The Hassman Company produces two joint products, X and Y. The isocost curve corresponding to a total cost of $500,000 is  
Qy = 1,000 – 10Qx – 5Qx^2
Where Qy is the quantity of product Y produced by the firm and Qx is the quantity of product X produced. The price of product X is 50 times that of product Y.

a. If the optimum output combination lies on this isocost curve, what is the optimum output of product x?
b. What is the optimum output of product Y?
c. Can you be sure that the optimum output combination lies on this isocost curve? Why or why not?

Explanation / Answer

a. Qx=0

b. Qy=1000

c.Qy = 1,000 – Qx – 50Qx^2
1'000=1'000-0-50*0^2=1'000
1'000=1'000

Hence, it lies on isocost line

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