Question: 5. (20 points ) Consider a monopolist facing inverse demand function () = 64 (7) where = 1 + 2 + 3 denotes the monopolist's
5. (20 points) Consider a monopolist facing inverse demand function () = 64 (7) where = 1 + 2 + 3 denotes the monopolist's production across three plants 1, 2
and 3. The multiplant monopolist operates three plants, with marginal cost functions:
1(1) = 41 2(2) = 2 + 22 3(3) = 6 + 3
a) Derive multiplant marginal cost () function.
b) Using multiplant marginal cost () function derived in a), find the monopolist's
profit-maximizing price and output at each plant.
c) How would your answer to b) change if 2(2) = 4?
show work.
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