Question

Company XYZ has a monopoly on a new product. The product can be manufactured in either of two factories. The costs of production for the two factories are MC1 = 10 + Qi and MC2 = 3 + 3Q2. The firm's demand for the product is P= 10 – 2(Q1 + Q2). How much should the firm produce in each factory? At what price should it sell the product?

Answer 1

Total reuomes TRF Marginal revues MR= MR at any point. Hice, on a new product, compay XYZ has a monopoly The film's demand for the product is: p= 10-2 (a +Q2) =)Q25 the Qit Q2 = Q. the) P= 10-2Q =) Why Q=0 =) P=10 When P=0 90-2Q=0 PQ = 10Q- 202 dQ MR = 10, Wher MR 30, 10-40-0 =)Q2.5 the) MC1 = lot ol MC2 = 3+ 3Q2 AP 10 =) Q = 0 When MC2 MCI 3 MR omad »Q G 2.5 MCI lis above Demad care, hence mci here only the, donnot cut MC2 is relevant Now, poot't marimising condition will be MR. = 10-4Q2 = 3+3Q2 MC2 Where Q=Q2, Q1 =0 ) 7=7Q2 =) Q2=1 CS Scanned with CamScanner

that, bactory 1 should produce o nit, factory 2 should produce, 1 nits To ful output 1 n't =Q. puce p= 10- 2Q2 = 10-2 =$8 = CS Scanned with CamScanner