Question

5. A drug company has a monopoly on a new patented medicine. The product can be made in either of two plants. The costs of production for the two plants are MC1 = 20 + 2Q1, and MC2 = 10 + 5Q2. The firm’s estimate of the demand for the product is P = 20 - 3(Q1 + Q2). How much should the firm plan to produce in each plant? At what price should it plan to sell the product?

15 years ago