Let the demand and cost functions of a multiplant monopolist be p = a - b(q...
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Let the demand and cost functions of a multiplant monopolist be p = a - b(q +92), C = a191+ B191, and C = a2q2 + B2q2 where all parameters are positive. Assume that an autonomous increase of demand increases the value of a, leaving the other parameters unchanged. Show that output will increase in both plants with a greater increase for the plant in which marginal cost is increasing less fast. Let the demand and cost functions of a multiplant monopolist be p = a - b(q +92), C = a191+ B191, and C = a2q2 + B2q2 where all parameters are positive. Assume that an autonomous increase of demand increases the value of a, leaving the other parameters unchanged. Show that output will increase in both plants with a greater increase for the plant in which marginal cost is increasing less fast.
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Managerial Economics
ISBN: 978-0133020267
7th edition
Authors: Paul Keat, Philip K Young, Steve Erfle
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