1. A monopoly firm has two factories for which costs are given by:
Factory #1: C1(Q1) = 10
Factory # 2: C2(Q2) = 20
The firm faces the following demand curve:
P = 700 − 5Q
where Q is total output – i.e., Q = Q1 + Q2.
a) What is the MR function?
b) What is the MC function of each factory?
c) What is the total MC function of the firm?
d) Calculate the profit maximizing output levels of each factory?
e) What is the profit maximizing level of price?
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