Explore BrainMass
Share

Explore BrainMass

    maximum profits

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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
    https://brainmass.com/economics/integration/multi-plant-monopoly-278103

    Solution Preview

    part a)
    Let plant 1 produces q1 and plant 2 produces q2
    Q=q1+q2
    For profit maximization MC=MR or MR=MC1=MC2
    MR=500-4Q=500-4q1-4q2
    MC1=4q1
    Equating MR=MC1, we get 500-4q1-4q2=4q1 or we can say 2q1+q2=125 eq--1

    MC2=2q2
    Equating MR=MC2, we get 500-4q1-4q2=2q2 or we can say ...

    Solution Summary

    This solution determines maximum profits.

    $2.19