A firm that faces a downward sloping demand has two factories. The total cost of production in Factory 1 and in Factory 2 are given respectively by TC(41) = 10q1 +2q7 and TC2(42) - 1042 + q, where q; is the quantity of output produced in Factory i, i = 1, 2. The demand curve for the firm's output is given by P = 510 – q, where q = 41 + 42 and p is the price. a) Derive the firm's marginal cost of production as a function of q. b) What is the firm's optimal output level? How many units of output does it produce in each factory? c) How much does it charge per unit of output?

A firm that faces a downward sloping demand has two factories. The total cost of production in Factory 1 and in Factory 2 are given respectively by TC(41) = 10q1 +2q7 and TC2(42) - 1042 + q, where q; is the quantity of output produced in Factory i, i = 1, 2. The demand curve for the firm's output is given by P = 510 – q, where q = 41 + 42 and p is the price. a) Derive the firm's marginal cost of production as a function of q. b) What is the firm's optimal output level? How many units of output does it produce in each factory? c) How much does it charge per unit of output?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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