Question

Q4) now suppose that the manufacturing of cellular phones, as described in question 3, is monopolized. The monopolist has 50 identical plants to run. Each plant has the same cost function as described in question 3. The overall marginal cost function for the multiplant monopolist is described by MC(Q) = 10 + Q/25. The market demand is also assumed to be the same as question 3. Recall Q^D= (6000-50p)/9

1) Show that the monopolist’s marginal revenue function is MR(Q) = 120-18Q/50

2) Show that the monopolist’s profit-maximizing output level is Q_M=275. What price does the monopolist set to sell this level of output?

3) What is the profit earned at each one of the monopolist's plants?

Answer 1