A monopolist’s inverse demand function is P = 150 − 3Q. The company produces out- put at two facilities; the marginal cost of producing at facility 1 is MC1(Q1) = 6Q1, and the marginal cost of producing at facility 2 is MC2(Q2) = 2Q2. (LO1, LO8) a. Provide the equation for the monopolist’s marginal revenue function. (Hint: Recall thatQ1 +Q2 =Q.) b. Determine the profit-maximizing level of output for each facility. c. Determine the profit-maximizing price.

A monopolist’s inverse demand function is P = 150 − 3Q. The company produces out- put at two facilities; the marginal cost of producing at facility 1 is MC1(Q1) = 6Q1, and the marginal cost of producing at facility 2 is MC2(Q2) = 2Q2. (LO1, LO8) a. Provide the equation for the monopolist’s marginal revenue function. (Hint: Recall thatQ1 +Q2 =Q.) b. Determine the profit-maximizing level of output for each facility. c. Determine the profit-maximizing price.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.13P

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