A drug company has a monopoly on a new patented medicine. The product can be made...

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A drug company has a monopoly on a new patented medicine. The product can be made in either of two plants. The marginal costs

business economics

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Answer 1

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mc, = 20+291 M = 10 +22 P = 20-30 mc, = me -) 20+ 20 = 20-60, 8@, = 0 TR= 200 - 32 MR = 20 - 6Q, me = mR - 10tha = 2069 100 =

The firm should produce 0 units in plant one and 1 units in plant 2. To maximise profit it should charge a price of 20 and 17 per units in plant one and two respectively.

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