Questions

NAPA Corporation's marginal cost is expressed by MC = 4 + 3Q, where MC is marginal cost and Q is the number of products produced. The price of a unit of its products is $3. If you are the consultant for the company, would you advise the firm to produce or shut down? Briefly explain your decision.

Dashen Company is a monopoly that produces at two plants. The demand for its product is given by P = 20 – Q. The marginal cost of plant 1 is MC1 = 2, and the marginal cost of plant 2 is MC2 = 2Q2.

a. How much output does the firm produce at each plant?

b. What price should it charge for its product?

Briefly explain how long-run equilibrium is different for each of the following types of markets: perfect competition, monopolistic competition, and monopoly.