Scenario: A small firm manufactures maple baseball bats in two small production facilities, with the following marginal cost and average total cost equations:
Plant 1: Marginal cost: MC₁ = 10 + 2Q,
Plant 1: Average total cost: ATC₁ = 10 + Q.
Plant 2: Marginal cost: MC₂ = 10 + 2Q,
Plant 2: Average total cost: ATC₂ = 10 + Q.

-Under the owner's demand to equalize profit at each facility,total profits across the two plants are such that the firm ________.Explain your answer.
A) loses $2,025
B) earns zero profit
C) earns positive economic profits of $3,625
D) earns positive economic profits of $4,050

Question

Scenario: A small firm manufactures maple baseball bats in two small production facilities, with the following marginal cost and average total cost equations:
Plant 1: Marginal cost: MC₁ = 10 + 2Q,
Plant 1: Average total cost: ATC₁ = 10 + Q.
Plant 2: Marginal cost: MC₂ = 10 + 2Q,
Plant 2: Average total cost: ATC₂ = 10 + Q.
 
-Under the owner's demand to equalize profit at each facility,total profits across the two plants are such that the firm ________.Explain your answer.
A) loses $2,025 
B) earns zero profit 
C) earns positive economic profits of $3,625 
D) earns positive economic profits of $4,050

Quizplus · Accepted Answer

The Answer of Scenario: A small firm manufactures maple baseball bats in two small production facilities, with the following marginal cost and average total cost equations:
Plant 1: Marginal cost: MC₁ = 10 + 2Q,
Plant 1: Average total cost: ATC₁ = 10 + Q.
Plant 2: Marginal cost: MC₂ = 10 + 2Q,
Plant 2: Average total cost: ATC₂ = 10 + Q.
 
-Under the owner's demand to equalize profit at each facility,total profits across the two plants are such that the firm ________.Explain your answer.
A) loses $2,025 
B) earns zero profit 
C) earns positive economic profits of $3,625 
D) earns positive economic profits of $4,050

Scenario: a Small Firm Manufactures Maple Baseball Bats in Two