A profit-maximizing monopoly has two plants that it can use to produce its goods. The inverse demand function is P(Q) = 10 – 0.5Q. The two plants are identical, with each plant i having total cost function TCi(qi) = 1 + qi + 0.5qi2, for i=1,2. a. Fill in the blanks. Suppose the firm produces using both plants. Then, the firm will produce _____ units using plant 1, and _____ units using plant 2. It will sell each units at ____ dollars. Its total profit is _____. b. What is the monopoly’s profit if it produced 2.9 units using one plant and 3.1 units using the other?
A profit-maximizing monopoly has two plants that it can use to produce its goods. The inverse demand function is P(Q) = 10 – 0.5Q. The two plants are identical, with each plant i having total cost function TCi(qi) = 1 + qi + 0.5qi2, for i=1,2. a. Fill in the blanks. Suppose the firm produces using both plants. Then, the firm will produce _____ units using plant 1, and _____ units using plant 2. It will sell each units at ____ dollars. Its total profit is _____. b. What is the monopoly’s profit if it produced 2.9 units using one plant and 3.1 units using the other?
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.9P
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Question
A profit-maximizing
The inverse demand function is P(Q) = 10 – 0.5Q. The two plants are identical, with
each plant i having total cost function TCi(qi) = 1 + qi + 0.5qi2, for i=1,2.
a. Fill in the blanks. Suppose the firm produces using both plants. Then, the firm will
produce _____ units using plant 1, and _____ units using plant 2. It will sell each units
at ____ dollars. Its total profit is _____.
b. What is the monopoly’s profit if it produced 2.9 units using one plant and 3.1 units
using the other?
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