Consider a monopoly with inverse demand function p = 24

Question

Consider a monopoly with inverse demand function p = 24 - y and cost function c(y)= 5y²+ 4:
i)Find the profit maximizing output and price, and calculate the monopolist's profits.
ii)Now consider the case in which the monopolist has now another plant with the cost structure c₂(y₂)= 10y₂. How much will the monopolist produce in each plant, what is the price, and the total profits of the monopoly?
iii)Now suppose there is a technological change in the first plant and it has the following cost function: c₁(y₁)
= 2y₁. How much will the monopolist produce in each plant and what is the price?

Quizplus · Accepted Answer

The Answer of Consider a monopoly with inverse demand function p = 24 - y and cost function c(y)= 5y²+ 4: i)Find the profit maximizing output and price, and calculate the monopolist's profits. ii)Now consider the case in which the monopolist has now another plant with the cost structure c₂(y₂)= 10y₂. How much will the monopolist produce in each plant, what is the price, and the total profits of the monopoly? iii)Now suppose there is a technological change in the first plant and it has the following cost function: c₁(y₁) = 2y₁. How much will the monopolist produce in each plant and what is the price?