This preview shows page 1. Sign up to view the full content.
Unformatted text preview: If the marginal revenue of producing output in a plant exceeds the marginal cost, the firm will add more to revenue than to cost by expanding output in the plant. If the marginal cost of producing in plant 1 is lower than that of producing in plant 2, the monopolist could reduce costs by producing more output in plant 1 and less in plant 2. As more output is produced in plant 1, the marginal cost of producing in the plant increases until it ultimately equals the marginal cost of producing in plant 2, such that MC 1 ( Q 1 ) = MC 2 ( Q 2 )...
View Full Document
This note was uploaded on 05/26/2010 for the course FINA 6260 taught by Professor Fort during the Spring '10 term at University of Arkansas for Medical Sciences.
- Spring '10