1. The inverse market demand is P=100 – 2/3Q. The firms have cost functions TC1 =...
1. The inverse market demand is P=100 – 2/3Q. The firms have cost functions TC1 = 15 + 3q1+ q1² TC2 = 20 + q + 2q2²
a. Assume there is a multiplant monopoly and TC1 and TC2 represents the cost of production in each plant. How much quantity should each plant produce?
b. Find the market price.
c. Assume there is a multiplant monopoly. Would it make sense for the firm to close one of the plants?
d. Does your answer from part a and b change if TC2 = 20 + q + 2q2² changes to TC2 = 1000 + q + 2q² ?
e. Explain why your answer from part d changed or remained the same.
f. How do you think businesses outside the classroom would behave if they had a plant and the total costs changed like the costs changed in part d. Explain.
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1. The inverse market demand is P=100 – 2/3Q. The firms have
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