Question

A monopolist supplies a market wit the inverse demand function P = 100 - (X +...

A monopolist supplies a market wit the inverse demand function P = 100 - (X + Y)
where X is output in plant 1 and Y output in plant 2. The total cost functions are Cx=X²  
Cy = 1.25Y² . Each plant has a fixed maximum capacity of 12 units of output.

a) Suppose the firm is able to expand capacity by one unit at only one plant which plant should it choose?

b) Suppose now that the firm is able to invest in expanding capacity by four units in total. How should that be allocated between the two plants?

c) If instead the firm is able to invest 10 units of capacity output, how should that be allocated?

Illustrate and explain answer in each case.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose the inverse demand for a monopolist’s product is given by P (Q) = 20 –...
Suppose the inverse demand for a monopolist’s product is given by P (Q) = 20 – 3Q                                              (Total marks = 5) The monopolist can produce output in two plants. The marginal cost of producing in plant 1 is MC1 = 20 + 2Q1 While the marginal cost of producing in plant 2 is MC2 = 10 + 5Q2 How much output should be produced in each plant? What price should be charged?
Acme is a monopolist who faces inverse market demand function P (Q, y) = 100 -...
Acme is a monopolist who faces inverse market demand function P (Q, y) = 100 - 2Q + y, where y is the quality level of Acme’s product. Acme has cost function function C(Q) = 20Q.    1. For now, let Acme’s quality level be predetermined at y = 80. (1a) Determine Acme’s optimal output level and profits. (1b) Determine aggregate surplus. (1c) Determine Acme’s output level such that aggregate surplus is maximized.What are Acme’s profits in this case? 2....
Acme is a monopolist who faces inverse market demand function P (Q, y) = 100 ?...
Acme is a monopolist who faces inverse market demand function P (Q, y) = 100 ? 2Q + y, where y is the quality level of Acme’s product. Acme has cost function function C(Q) = 20Q.    1. For now, let Acme’s quality level be predetermined at y = 80.    (1a) Determine Acme’s optimal output level and profits.    (1b) Determine aggregate surplus.    (1c) Determine Acme’s output level such that aggregate surplus is maximized.What are Acme’s profits in...
Suppose the inverse demand for a monopolist’s product is given by P (Q) = 20 –...
Suppose the inverse demand for a monopolist’s product is given by P (Q) = 20 – 3Q    The monopolist can produce output in two plants. The marginal cost of producing in plant 1 is MC1 = 20 + 2Q1 While the marginal cost of producing in plant 2 is MC2 = 10 + 5Q2 How much output should be produced in each plant? What price should be charged?
A multi-plant monopolist faces a demand P = 460 - 6Q . The first plant (call...
A multi-plant monopolist faces a demand P = 460 - 6Q . The first plant (call it Plant 1) has total cost, TC1 = 2.5Q2 and the second plant (call it Plant 2) has total cost, TC2 = 5Q2 . Suppose that the monopolist owns both, plants 1 and 2. Determine the optimal price this monopolist should charge, the total number of units the monopolist will supply, and the number of units the monopolist should produce at each plant. Also,...
3. Suppose the inverse demand for a monopolist’s product is given by P (Q) = 150...
3. Suppose the inverse demand for a monopolist’s product is given by P (Q) = 150 – 3Q The monopolist can produce output in two plants. The marginal cost of producing in plant 1 is MC1 = 6Q1 While the marginal cost of producing in plant 2 is MC2 = 2Q2 (Answer clearly with steps please) a) How much output should be produced in each plant? b) What price should be charged?
A monopolist faces an inverse demand of p(y)=100-5y, and its total cost of production is c(y)=20y,...
A monopolist faces an inverse demand of p(y)=100-5y, and its total cost of production is c(y)=20y, where y is the output level. The monopolist maximizes its profits at output level equal to 8. Calculate the deadweight loss of this monopoly.
1. Suppose a monopolist faces an inverse demand function of P = 150 ? 2Q. The...
1. Suppose a monopolist faces an inverse demand function of P = 150 ? 2Q. The firm’s cost functions is 30Q. (a) What is the firm’s marginal cost? Average cost? How about the firm’s marginal revenue? (b) What would the firm charge if they were a single price monopolist? (c) What is the consumer surplus, producer surplus, and dead weight loss. (d) Suppose the monopolist is able to perfectly price descriminate, what are the consumer surplus, producer surplus, and dead...
Example 1: Suppose a monopolist faces an inverse demand function as p = 94 – 2q....
Example 1: Suppose a monopolist faces an inverse demand function as p = 94 – 2q. The firm’s total cost function is 1.5q2 + 45q + 100. The firm’s marginal revenue and cost functions are MR(q) = 90 – 4q and MC(q) = 3q + 45. How many widgets must the firm sell so as to maximize its profits? At what price should the firm sell so as to maximize its profits? What will be the firm’s total profits?
A monopolist faces an inverse demand of p(y)=300-3y, and its total cost of production is c(y)=30y,...
A monopolist faces an inverse demand of p(y)=300-3y, and its total cost of production is c(y)=30y, where y is the output level. Calculate the x-intercept of the monopolist's marginal revenue curve.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT