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PROBLEM (6) A monopolist faces a market demand Q = 180 – 2p and has two plants 1 and 2, producing identical products with total cost functions TC:(q) = q² and TC2(q) = 1/3 q² (hence MC1(q) = 2q and MC2(q) = 2q/3), respectively. (a) Derive the monopolistť's multiplant marginal cost function. (b) What is the optimal quantity produced at each of the plants, and what is the optimal price? (c) Calculate the net profits for the monopoly and the DWL. %3D %3D %3D

PROBLEM (6) A monopolist faces a market demand Q = 180 – 2p and has two plants 1 and 2, producing identical products with total cost functions TC:(q) = q² and TC2(q) = 1/3 q² (hence MC1(q) = 2q and MC2(q) = 2q/3), respectively. (a) Derive the monopolistť's multiplant marginal cost function. (b) What is the optimal quantity produced at each of the plants, and what is the optimal price? (c) Calculate the net profits for the monopoly and the DWL. %3D %3D %3D

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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PROBLEM (6) A monopolist faces a market demand Q = 180 – 2p and has two plants 1 and 2, producing identical products with total cost functions TC1(q) = q? and TC2(q) = 1/3 q² (hence MC1(q) = 2q and MC:(q) = 2q/3), respectively. (a) Derive the monopolisť's multiplant marginal cost function. (b) What is the optimal quantity produced at each of the plants, and what is the optimal price? (c) Calculate the net profits for the monopoly and the DWL. (d) Returning to (a) and (b), assume TC2(q) = 40q instead (everything else; demand, plant 1's costs stays the same). What would be the optimal quantity produced at each of the plants? %3D %3D
Transcribed Image Text:PROBLEM (6) A monopolist faces a market demand Q = 180 – 2p and has two plants 1 and 2, producing identical products with total cost functions TC1(q) = q? and TC2(q) = 1/3 q² (hence MC1(q) = 2q and MC:(q) = 2q/3), respectively. (a) Derive the monopolisť's multiplant marginal cost function. (b) What is the optimal quantity produced at each of the plants, and what is the optimal price? (c) Calculate the net profits for the monopoly and the DWL. (d) Returning to (a) and (b), assume TC2(q) = 40q instead (everything else; demand, plant 1's costs stays the same). What would be the optimal quantity produced at each of the plants? %3D %3D
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