A Monopolist Owns Two Plants in Which to Produce Product $M C _ { 1 } = M C _ { 2 }$

Multiple Choice

A monopolist owns two plants in which to produce product A. The marginal cost of producing A is increasing, but currently is lower in plant 1 than in plant 2. How should the monopolist allocate production?

A) Produce all output in plant 1.
B) Produce all output in plant 2.
C) Produce 50 percent in plant 1 and 50 percent in plant 2.
D) Produce in plant 1 up to the point where marginal costs are equated across the plants. (In other words, reallocate production so that $M C _ { 1 } = M C _ { 2 }$ .)