KOALA PLC manufactures a special type of computer chips and has 2 production plants located in Sydney and Melbourne. Both plants produce an identical product. The total cost functions for the 2 plants are given by: TC₁ = 10q₁ +5q2 for the Sydney plant TC₂ = 10q2 + 2q2 for the Melbourne plant Where 91,92 are the outputs of the Sydney and Melbourne plants respectively. Suppose the company is a monopolist and sells the computer chip at a price p given by the inverse demand function p = 124-Q where Q = 9₁ +92 i) ii) iii) Write down the expression for the company's profit (n) as a function of 91,92 Determine the profit maximising levels of q₁,92 and making sure to check that the second order conditions for a maximum are satisfied. What will be the price at the profit maximising levels of production?

KOALA PLC manufactures a special type of computer chips and has 2 production plants located in Sydney and Melbourne. Both plants produce an identical product. The total cost functions for the 2 plants are given by: TC₁ = 10q₁ +5q2 for the Sydney plant TC₂ = 10q2 + 2q2 for the Melbourne plant Where 91,92 are the outputs of the Sydney and Melbourne plants respectively. Suppose the company is a monopolist and sells the computer chip at a price p given by the inverse demand function p = 124-Q where Q = 9₁ +92 i) ii) iii) Write down the expression for the company's profit (n) as a function of 91,92 Determine the profit maximising levels of q₁,92 and making sure to check that the second order conditions for a maximum are satisfied. What will be the price at the profit maximising levels of production?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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