11. Pr. 9 on p. 388, P & R. A company has a monopoly on a new drug. The drug can be manufactured in either of two plants. The costs of production for the two plants are MC1 = 20+2Q1 and MC2 = 10+5Q2. The demand for the product is P = 20 – 3(Q1 + Q2). Marginal revenue is 20 – 6(Q1 + Q2). How much should the firm produce in each plant? What price should it charge for the product? Hint: set marginal revenue equal to each marginal cost. That will give you two equations in two unknowns, Q1 and Q2. then solve for Q1 and Q2. - -

11. Pr. 9 on p. 388, P & R. A company has a monopoly on a new drug. The drug can be manufactured in either of two plants. The costs of production for the two plants are MC1 = 20+2Q1 and MC2 = 10+5Q2. The demand for the product is P = 20 – 3(Q1 + Q2). Marginal revenue is 20 – 6(Q1 + Q2). How much should the firm produce in each plant? What price should it charge for the product? Hint: set marginal revenue equal to each marginal cost. That will give you two equations in two unknowns, Q1 and Q2. then solve for Q1 and Q2. - -

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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