Problem
A monopolist with a demand curve given by P = 240-2Q has a cost structure made up of a fixed cost of $500 and a marginal production cost of MC = 40.
(a) When maximizing profit, how much profit will she make?
(b) Suppose now that she can outsource some of her assembly work to a plant in Indonesia, and this reduces her marginal production cost to $32 per unit, but also increases her fixed cost to $750. Should she outsource?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.