A firm uses two plants (A and B) to produce a product. The plant's marginal cost functions are given by the following equations:
MCa=10+.01Qa and MCb=4+.03Qb
If the firm wanted to produce 1400 units should it produce 700 units in each plant? Why or why not? Explain and illustrate graphically.© BrainMass Inc. brainmass.com October 10, 2019, 4:02 am ad1c9bdddf
The firm should not produce 700 units in each plant. It should produce all 1400 ...
This solution calculates and illustrates graphically the decision whether to concentrate production in one plant or split production between two plants.