A firm operates two plants. The total cost schedules for the respective plants are TC1 = 5*Q1 + .1*Q12 and TC2= 2*Q2 + .1*Q22. The firm’s demand schedule is Q = 160 – 10*P. What is the profit maximizing amounts to be allocated to plant 1? Plant#1 =

Given TC1 = 5q + 0.1q2 Demand schedule = q = 160 – 10p MC1 = dTC/dq = 5 + 0.2q TR = P * q Price equation = 10p = 160 – q P = 16 – 0.1q TR = 16 – 0.1q * (q) = 16q – 0.1q2 MR = dTR/dQ = 16 – 0.2q The profit maximizing takes place where MR = MC 16 – 0.2q = 5 + 0.2q Q = 27.5 Therefore total cost allocated for plant 1 = 5(27.5) + 0.1(27.5)2 = 213.13 $

Answered: A firm operates two plants. The total…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A firm operates two plants. The total cost schedules for the respective plants are TC₁ = 5*Q₁ + .1*Q₁² and TC₂
= 2*Q₂ + .1*Q₂². The firm’s demand schedule is Q = 160 – 10*P. What is the profit maximizing amounts to be allocated to plant 1? Plant#1 =

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