Suppose a company has a monopoly on a game called Monopoly and faces a demand curve given by QT =
QT = 100 – P
and a marginal revenue function given by
MR = 100 – 2QT
Where QT equals the combined total number of games produced per hour in the company’s two factories (QT = q1 + q2). If factory 1 has a marginal cost function given by
MC1 = q1 – 5
and factory 2 has a marginal cost function given by
MC2 = 0.5q2 – 5
How much total output will the company choose to produce and how will it distribute this production between its two factories in order to maximize profits?
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Question Posted: January 21, 2013 04:18:31