4. Multi-plant monopolist: A monopolist has access to two production processes with the following marginal cost curves: MC = 12 +z and MC2 = ty, where output in production process 1 is z, output in production process 2 is y and hence total output produced is Q = z+y. (a) During peak season, the monopolist faces the following demand curve: P 125 – Q. How much should he produce at each facility to maximize profits? (b) During off season, the monopolist faces a reduced demand given by: P = 25 - }Q. How much should he produce at each facility to maximize profits?
4. Multi-plant monopolist: A monopolist has access to two production processes with the following marginal cost curves: MC = 12 +z and MC2 = ty, where output in production process 1 is z, output in production process 2 is y and hence total output produced is Q = z+y. (a) During peak season, the monopolist faces the following demand curve: P 125 – Q. How much should he produce at each facility to maximize profits? (b) During off season, the monopolist faces a reduced demand given by: P = 25 - }Q. How much should he produce at each facility to maximize profits?
Chapter8: Monopoly
Section: Chapter Questions
Problem 7SQP
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Transcribed Image Text:4. Multi-plant monopolist:
A monopolist has access to two production processes with the following marginal cost curves: MC = 12 +r and
MC2 =y, where output in production process 1 is r, output in production process 2 is y and hence total output
produced is Q =r+y.
(a) During peak season, the monopolist faces the following demand curve: P = 125 – Q. How much should he
produce at each facility to maximize profits?
(b) During off season, the monopolist faces a reduced demand given by: P= 25 - Q. How much should he produce
at each facility to maximize profits?
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