A monopolist’s inverse demand function is P = 100 – Q. The company produces output at two facilities; the marginal cost of producing at facility 1 is
MC1(Q1) = 4Q1, and the marginal cost of producing at facility 2 is
MC2(Q2) = 2Q2.
a. Provide the equation for the monopolist’s marginal revenue function.
b. Determine the profit-maximizing level of output for each facility.
c. Determine the profit-maximizing price.

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November 15, 2011

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