Question

- Multiplant monopoly problem: Assume the firm has two plants with the following marginal cost functions:

MC_{1}= 20 +
2Q_{1}

MC_{2}= 10 +
5Q_{2}

- What is the profit maximizing price? Show your work.

Answer #1

**ANSWER:**

Since, marginal cost is constant for a profit maximizing monopoly, MC1 = MC2

MC2=10+5Q2

**If Q2 = 4, then MC2= 10 + (5*4) = 30**

Putting this value in equation, MC1=20+2Q1

30 = 20 + 2Q1

**Q1 = 5**

**----------------------------**

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MC2
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MC1= 20 +
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MC2= 10 +
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