Suppose a Firm Produces Its Output in Two Different Plants

question 71

Essay

Suppose a firm produces its output in two different plants.Production costs at plant 1 are given by C₁ = 4(Q₁)²,where Q₁ is the amount of production at plant 1.The production costs at plant 2 are given by C₂ = 2(Q₂)²,where Q₂ is the amount of production at plant 2.The corresponding marginal costs at each plant are MC₁ = 8Q₁ and MC₂ = 4Q₂.If the firm produces a total of 24 units of output,how much output should it produce at each plant?

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Definitions:

Trade Acceptance

A written instrument, drawn by the seller on the buyer, who accepts it, indicating the buyer’s commitment to pay the seller for goods at a future date.

Domestic Sale

A commercial transaction involving goods or services that takes place within the same country.

Specified Amount

denotes a particular sum of money that is clearly stated in a contract or agreement.

Draft

An initial version of a document or plan that is subject to revisions and improvements.