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Problem III.  Suppose the inverse demand for a monopolist’s product is given by P= 110-1/2Q.

The monopolist can produce output in two plants. The marginal cost of producing in plant 1 is MC1  = 3Q1, and the marginal cost of producing in plant 2 is MC2= 2Q2.

1. How much output should be produced in each plant to maximize profits?

2. What price should be charged for the product?

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