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Economics

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1. A quadratic profit function (Q) = aQ2 +bQ + 5, defined for Q 20, is to be used to reflect the following assumptions: (1) The profit function is concave. (ii) The maximum profit occurs at a positive output level. What restrictions are called for on parameters a and b? What is maximum profit?

2.) For each of the following pairs of goods, which good would you expect to have more elastic demand? Give your reasons. a) Newspapers or entertainment magazines. (5 marks) b) Kpop recordings or classical music recordings in general. (5 marks) c) Heating oil during the next six months or heating oil during the next five years. (5 marks) d) Coca Cola or soda in general (5 marks)