To Maximize Its Profit,a Firm with Two Plants Should

question 52

Multiple Choice

To maximize its profit,a firm with two plants should

• A)produce the output at which total marginal cost equals marginal revenue.
• B)choose the profit-maximizing output then allocate it equally between the two plants.
• C)allocate output so that marginal cost is the same in two plants
• D)both a and b
• E)both a and c

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Definitions:

Herfindahl-Hirschman Index

A measure of market concentration used to determine the level of competition within an industry.

Market Share

The portion of a market controlled by a particular company or product.

Oligopolistic Models

Economic models that describe markets in which a few firms dominate, often leading to pricing and output decisions that consider the actions of competitors.

Cartel

An agreement among competing firms to control prices or exclude entry of a new competitor in a market, often in order to maximize the members' profits at the expense of consumers.