A monopolist with two plants operates with a marginal revenue of 500-4Q and marginal costs of 4Q for plant 1 and 2Q for plant 2.
What are outputs at each plant to maximize profits?
What price maximizes profits?
What are maximum profits?© BrainMass Inc. brainmass.com October 10, 2019, 12:05 am ad1c9bdddf
Let plant 1 produces q1 and plant 2 produces q2
For profit maximization MC=MR or MR=MC1=MC2
Equating MR=MC1, we get 500-4q1-4q2=4q1 or we can say 2q1+q2=125 eq--1
Equating MR=MC2, we get 500-4q1-4q2=2q2 or we can say ...
This solution determines maximum profits.