a) A competitive firm has a single factory with the cost function c(y)=4y^(2)+89 and produces 28 units in order to maximize profits. Although the price of output does not change, the firm decides to build a second factory with the cost function c(y)=8y^(2)+39. To maximize its profits, how many units should it produce in the second factory? (hint: MR=MC_(1)=MC_(2) )
b) Where is two-part tariffs scheme taken? Explain how two prices are determined in detail.