Electron Control, Inc., a manufacturer of voltage regulators for industrial power generators, currently consolidates production at a single plant in Chattanooga, Tennessee, but a multiplant alternative to centralized production is being considered. Estimated demand, marginal revenue, and single-plant production cost curves for the firm are
P = 515 − 0.005Q
MR = 515 − 0.01Q
TC = 160,000 + 35Q + 0.01Q2
MC = 35 + 0.02Q
A) Find the single-plant profit-maximizing level of output.
B) Find the minimum efficient scale of the single-plant operation.
C) Assuming that multiple smaller plants production is possible under the same cost conditions described above, find the profit-maximizing Multiplan level of output.
D) Given your answers to parts B and C, how many numbers of plants should you suggest?