1) Patents and Trade Secrets A firm can invent a new product. That firm is the only entity in that world that can invent the product. Doing so leads to a research cost of r, to be paid once in the first period. The monopoly price for this new product is 6$ per unit and the firm can produce this good, if research have peen done, at a cost of where q is the quantity of good produced. Time is discrete and the irm faces the same price and cost function every period. Without a patent, other firms enter the market and those firms can produce the product more efficiently, therefore without a patent che firm makes 0 profit. a) What is the value for the firm of a patent of infinite duration? Assume a discount factor B = 0.9. b) Suppose that there is no possibility for the firm of keeping a trade secret. The research cost for that good is 30$. The government can create a patent for the good before the firm has to make a research decision. The terms of the patent cannot be changed after its

1) Patents and Trade Secrets A firm can invent a new product. That firm is the only entity in that world that can invent the product. Doing so leads to a research cost of r, to be paid once in the first period. The monopoly price for this new product is 6$ per unit and the firm can produce this good, if research have peen done, at a cost of where q is the quantity of good produced. Time is discrete and the irm faces the same price and cost function every period. Without a patent, other firms enter the market and those firms can produce the product more efficiently, therefore without a patent che firm makes 0 profit. a) What is the value for the firm of a patent of infinite duration? Assume a discount factor B = 0.9. b) Suppose that there is no possibility for the firm of keeping a trade secret. The research cost for that good is 30$. The government can create a patent for the good before the firm has to make a research decision. The terms of the patent cannot be changed after its

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

You operate a Caribbean destination resort. You currently offer plans for a cruise departing from the resort and plans for a casino stay. It is expected that in 2021 there will be some return to more normal travel. You will re-launch your advertising for 2021 announcing that customers will be able to do both for one price. Your marginal cost per customer across both tours is $4800. Customer Preferences Cruise Casino Customer 1 $7,000 $3,000 Customer 2 $2,000 $6,000 Given the preferences, would bundling improve profits over the high-price strategy? Support your conclusion by showing if (by how much) profits differ under each strategy, bundle v high price.
am. 114.
Please my dear hand written solutions are strictly prohibited.
A monopolist is facing the following demand schedule Pa24-30 That is, Q0 implies Pe24, then Qefimplies P21, and Q-2 entals P18, and so one. Fixed costs will be neglected in this analysis. The marginal cost is constant and equal to 3 for every unit produced. Determina (a) The quantity produced and the amount of maximum profits (b) Price and quantity to yield the efficient solution (c) Redo (a) when we impose a sales tax equal to 4 (per unit sold).
Q)Firm A and B are Cournot competitors, who produce good x. Both firms have zero cost and demand is X = 215 – P, where P is market clearing price. If firm produces 90 units, then what is the optimal amount of output for firm A to produce. solve our if you know correct and clearsolution.
Need answers to all questions
say the managers of the dinner restaurant (previously mentioned) decided to implement the new strategy of targeting higher-income consumers. Suppose that the quality improvements associated with this strategy change will increase the variable costs for the average entrée from $2.50 to $4.50 and that the price change associated with this strategy will raise the price of the average entrée from $8.00 to $13.0O. If the base sales level for the restaurant is 400 entrées per week, then the breakeven level of entrée sales that the manager should be considering is: Select one: O a. 141 entrées per week O b. -200 entrées per week O c. -141 entrées per week O d. 200 entrées per week
(Screening Problem) A monopolist decides both the price p and the quality q of the product he sells. Each buyer buys exactly one unit, but buyers vary in terms of their preferences for quality. There are two types of buyers: high-type with utility functions UH (q, t) = 2/q-p and low-type with utility function U (q, t) = vq – p. Let the probability of drawing a high-type buyer is 0.2. The cost of production for quality level q is just q (i.e., c(q) = q). The monopolist attempts to maximize his revenue by offering a menu of contracts {(qL, PL), (qH, PH)}. Find the optimal screening contract for the monopolist. %3D
A monopoly can use one of two alternative technologies. One technology requires 10 units of capital and 11 units of labor for each unit of output. The other technology requires 20 units of capital and 2 units of labor for each unit of output. The price of capital, r, and labor, w are both $1 per time period. This means the cost function cor- responding to the first technology is C1(y) = 2ly and the cost function corresponding to the second technology is C2(y) = 22y. The demand function is given by: P(y) = 100 -y The unregulated monopolist will clearly use the first technology since it allows produc- tion of any output level y at a lower cost. %3D %3D (a) Calculate the monopoly's output, price, and profit if it uses the first technology Consider a rate of return regulation which allows the monopoly to take as profit only $0.1 per each $1 of capital. (b) What would be the output, price and profit under each technology?