Explain the profit maximization condition of a multi-plant monopolist

Marketing Jan 13, 2021

Explain the profit maximization condition of a multi-plant monopolist.

Expert Solution

A multi-plant monopolist allocates more resources to the plants with the lower the marginal cost. Its profit is maximized when the marginal cost becomes equals across. Moreover, they must be equals to the marginal revenue. That is

MC1 = MC2 = ... = MCn = MR.

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