Based on market research, a film production company in Ectenia obtains the following information about the demand and production costs of its new DVD:Demand:P=1,600−10QP=1,600−10QTotal Revenue:TR=1,600Q−10Q2TR=1,600Q−10Q2Marginal Revenue:MR=1,600−20QMR=1,600−20QMarginal Cost:MC=400+10QMC=400+10Q where QQ indicates the number of copies sold and PP is the price in Ectenian dollars.Complete the following table by finding the price and quantity that maximize the company's profit and the price and quantity that maximize social welfare.ScenarioPriceQuantity(Dollars)(DVDs)Maximizes the company's profit Maximizes social welfare The deadweight loss from the monopoly is . Suppose, in addition to the foregoing costs, the director of the film has to be paid. The company is considering four options:I.A flat fee of 3,000 Ectenian dollarsII.50 percent of the profitsIII.150 Ectenian dollars per unit soldIV.50 percent of the revenue Complete the following table by finding the price and quantity that maximize the company's profit under each of the following options.OptionsPriceQuantityChange in Deadweight Loss(Dollars)(DVDs)Flat fee of 3,000 Ectenian dollars 50 percent of the profits 150 Ectenian dollars per unit sold 50 percent of the revenue

* SOLUTION :- Given that , Demand: P=1,600−10Q Total Revenue: TR=1,600Q−10Q2 Marginal Revenue:…

Answered: Based on market research, a film…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Based on market research, a film production company in Ectenia obtains the following information about the demand and production costs of its new DVD:

Demand:	P=1,600−10QP=1,600−10Q
Total Revenue:	TR=1,600Q−10Q2TR=1,600Q−10Q2
Marginal Revenue:	MR=1,600−20QMR=1,600−20Q
Marginal Cost:	MC=400+10QMC=400+10Q

where QQ indicates the number of copies sold and PP is the price in Ectenian dollars.

Complete the following table by finding the price and quantity that maximize the company's profit and the price and quantity that maximize social welfare.

Scenario	Price	Quantity
(Dollars)	(DVDs)
Maximizes the company's profit
Maximizes social welfare

The deadweight loss from the monopoly is

Suppose, in addition to the foregoing costs, the director of the film has to be paid. The company is considering four options:

I.	A flat fee of 3,000 Ectenian dollars
II.	50 percent of the profits
III.	150 Ectenian dollars per unit sold
IV.	50 percent of the revenue

Complete the following table by finding the price and quantity that maximize the company's profit under each of the following options.

Options	Price	Quantity	Change in Deadweight Loss
(Dollars)	(DVDs)
Flat fee of 3,000 Ectenian dollars
50 percent of the profits
150 Ectenian dollars per unit sold
50 percent of the revenue

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