A monopolist produces a single good from the utilization of two plants, plant 1 and plant 2. It...
Question:
A monopolist produces a single good from the utilization of two plants, plant 1 and plant 2. It faces an inverse demand curve of: {eq}P = 1100-2Q {/eq}. Q is total quantity produced, meaning {eq}Q = q1+ q2 {/eq} (q1= quantity produced in plant 1, and q2= quantity produced in plant 2). Plant 1 is an older plant that has a marginal cost of production equal to {eq}10q1 {/eq}. Plant 2 is newer, and its marginal cost of production is {eq}5q2 {/eq}. How much should this monopolist produce in total? And, how much will each plant be producing at the profit maximizing level of output?
Quantity Produced:
The quantity produced is the total products manufactured by the producers that are taken to the market for sale. In an equilibrium condition, the quantity produced becomes equal to the quantity demanded, resulting in no wastage of resources in the economy.
Answer and Explanation: 1
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View this answerThe inverse demand function is given as:
{eq}P = 1100 - 2Q {/eq}
Q represents the total quantity produced, combining the production of both firms.
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What is a Monopoly in Economics? - Definition & Impact on Consumers
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Chapter 7 / Lesson 2
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Understand the meaning of a monopoly in economics and what it does. Also, know the characteristics of a monopoly and the different types of monopolies.
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