Multi-plant monopolist: A monopolist has access to two production processes with the following marginal cost curves:...

Multi-plant monopolist: A monopolist has access to two production processes with the following marginal cost curves: MC1 = 0:8x and MC2 = 64+ 0:2y, where output in production process 1 is x, output in production process 2 is y and hence total output produced is Q = x + y:

(a) During peak season, the monopolist faces the following demand curve: P = 320 1:2Q: How much should he produce at each facility to maximize profits? What would be his proÖt-maximizing price?

(b) During off season, the monopolist faces a reduced demand given by: P = 1921:2Q: How much should he produce at each facility to maximize profits? What would be his profit-maximizing price?

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Expert Solution

Rahul Sunny answered 1 year ago

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