Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince

Exercise 1

Amonopolist's inverse demand function is P =150 - 3 Q. The company produces output at two facilities; the marginal cost of producing at facility 1 is MC 1 ( Q 1 ) = 6 Q 1 , and the marginal cost of producing at facility 2 is MC 2 ( Q 2 ) = 2 Q 2.
a. Provide the equation for the monopolist's marginal revenue function. ( Hint : Recall that Q 1 + Q 2 = Q.)
b. Determine the profit-maximizing level of output for each facility.
c. Determine the profit-maximizing price.