A Monopolist Owns Two Plants in Which to Produce Product

question 32

Multiple Choice

A monopolist owns two plants in which to produce product A.The marginal cost of producing A is increasing,but currently is lower in plant 1 than in plant 2.How should the monopolist allocate production?

• A) Produce all output in plant 1.
• B) Produce all output in plant 2.
• C) Produce 50 percent in plant 1 and 50 percent in plant 2.
• D) Produce in plant 1 up to the point where marginal costs are equated across the plants. (In other words, reallocate production so that )

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Definitions:

Substance Use

The consumption of drugs, alcohol, or other chemicals, potentially leading to dependency or addiction.

Control Center

In physiology, a system or region that receives information and regulates vital body functions or responses, such as the brain's role in regulating temperature.

Human Body

The physical structure of a person, including the bones, flesh, and organs.

Brain

The central organ of the nervous system in humans and other vertebrates, responsible for coordinating mind and body activities.