Suppose you are a monopolist operating two plants at different locations. Both plants produce the same product; Q1 is the quantity produced at plant 1 and Q2 is the quantity produced at plant2. You face and inverse demand function of:
P=500 – 2Qm
Where Qm is the market demand. The cost functions for the two plants respectively are
C1=25+2Q 1^2 and C2=20+Q2^2
a) What are your marginal revenue and marginal cost functions?
b) What are the profit maximizing quantities for each plant and their price in the marketplace?
c) How much profit will the firm make?
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