Re: Multi-plant Monopoly - May 19

Posted by aditi5000 on May 19, 2012; 3:55pm
URL: http://discussion-forum.276.s1.nabble.com/Multi-plant-Monopoly-May-19-tp7567020p7567043.html

a. For part a I made an error in calculation (if my theory is not wrong i.e. !)
q for both plants = 4.5
Total q = 9
p = 1
profit = -2 ie a loss to the extent of fixed costs

So produce only 4.5 in one plant. Other plant, produce 0 ie no costs
So, q = 4.5
total q = 4.5
p = 5.5
profit = 19.25

b. Monopolist has to bear the fixed cost of 1 even if production is zero
profit = 18.25