If a firm has a monopoly in both the production and distribution, to maximize the overall economic profit of the firm, managers of either the production or distribution center should be instructed to maximize profit and the managers of the other center should be instructed to operate as a competitive market.

Question

Quizplus · Accepted Answer

If a firm has a monopoly in both production and distribution, it can maximize its overall economic profit by having the production center maximize profit and the distribution center operate as a competitive market. This is because the production center will produce the quantity of output that maximizes its profit, and the distribution center will sell this output at the price that maximizes its profit. The overall economic profit of the firm is the sum of the profits of the production and distribution centers.

If a Firm Has a Monopoly in Both the Production