Explore BrainMass
Share

Explore BrainMass

    Output determination in multi-plant business

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

    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
    https://brainmass.com/economics/production/output-determination-in-multi-plant-business-447155

    Solution Preview

    The firm should not produce 700 units in each plant. It should produce all 1400 ...

    Solution Summary

    This solution calculates and illustrates graphically the decision whether to concentrate production in one plant or split production between two plants.

    $2.19