3. Jukt Electronics has the exclusive rights to sell microchips in Nirvana (i.e. it is a monopolist in Nirvana). The inverse market demand for microchips in Nirvana is given by P(Q) = 360 - Q where Q is measured in millions of chips and P in dollars per million chips. Jukt's marginal cost of producing microchips is given by MC(Q) = .5Q. a) How many millions of microchips will Jukt sell in Nirvana? At what price will it sell the microchips? Illustrate your answer. Be sure to indicate in your diagram the total quantity sold and the price at which it is sold. Microchips are also traded on the world market in a perfectly competitive market. The current market price is $100 per thousand. b) If Jukt has the option to sell chips on the world market (and remain a monopolist in Nirvana) will it? Briefly explain your answer. (You will be asked to calculate the amount in the next part. In this part simply explain why the firm might choose to sell to the world). c) At the price of $100 how many millions of chips will Jukt sell to the world market? How many chips will it sell in Nirvana? What will be the price of chips in Nirvana? Illustrate your answer in your diagram from part (a). d) If there was a cost to transport the chips from Nirvana to the world market of $20 per thousand, then how many chips will Jukt supply to the world market? How many chips will it sell in Nirvana? What will be the price in Nirvana?
3. Jukt Electronics has the exclusive rights to sell microchips in Nirvana (i.e. it is a monopolist in Nirvana). The inverse market demand for microchips in Nirvana is given by P(Q) = 360 - Q where Q is measured in millions of chips and P in dollars per million chips. Jukt's marginal cost of producing microchips is given by MC(Q) = .5Q. a) How many millions of microchips will Jukt sell in Nirvana? At what price will it sell the microchips? Illustrate your answer. Be sure to indicate in your diagram the total quantity sold and the price at which it is sold. Microchips are also traded on the world market in a perfectly competitive market. The current market price is $100 per thousand. b) If Jukt has the option to sell chips on the world market (and remain a monopolist in Nirvana) will it? Briefly explain your answer. (You will be asked to calculate the amount in the next part. In this part simply explain why the firm might choose to sell to the world). c) At the price of $100 how many millions of chips will Jukt sell to the world market? How many chips will it sell in Nirvana? What will be the price of chips in Nirvana? Illustrate your answer in your diagram from part (a). d) If there was a cost to transport the chips from Nirvana to the world market of $20 per thousand, then how many chips will Jukt supply to the world market? How many chips will it sell in Nirvana? What will be the price in Nirvana?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please help me solve part d only. Thank you
Transcribed Image Text:3. Jukt Electronics has the exclusive rights to sell microchips in Nirvana (i.e. it is a
monopolist in Nirvana). The inverse market demand for microchips in Nirvana is given
by P(Q) = 360 - Q where Q is measured in millions of chips and P in dollars per million
chips. Jukt's marginal cost of producing microchips is given by MC(Q) = .5Q.
a) How many millions of microchips will Jukt sell in Nirvana? At what price will it
sell the microchips? Illustrate your answer. Be sure to indicate in your diagram the
total quantity sold and the price at which it is sold.
Microchips are also traded on the world market in a perfectly competitive market. The
current market price is $100 per thousand.
b) If Jukt has the option to sell chips on the world market (and remain a monopolist in
Nirvana) will it? Briefly explain your answer. (You will be asked to calculate the
amount in the next part. In this part simply explain why the firm might choose to
sell to the world).
c) At the price of $100 how many millions of chips will Jukt sell to the world
market? How many chips will it sell in Nirvana? What will be the price of chips in
Nirvana? Illustrate your answer in your diagram from part (a).
d) If there was a cost to transport the chips from Nirvana to the world market of $20
per thousand, then how many chips will Jukt supply to the world market? How
many chips will it sell in Nirvana? What will be the price in Nirvana?
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