Suppose that a unique technology is developed that allowed for the production of lightsabers. The inspired entrepreneur (let's say, Lucas George) who developed the technology immediately slaps a patent on the design and hoards kyber crystals (necessary input). Demand and production costs are given below: P(Q) = 14,000 - 600Q C(Q)= 3,000+ 100² 1. How much profit does Lucas the monopolist earn? 2. Solve for the market failure of Lucas operating as a monopolist relative to what would be observed if Lucas operated as a competitive firm. Martin the Martian (not to be confused with any other martian that might be copyrighted...) observes the profits being made by Lucas. Determining that ray guns are not that different from lightsabers, Martin begins competing with Lucas: P'(Q) 12,000 - 600Q' 3. A third potential business owner, Dr. When, has watched this market carefully and is trying to decide whether or not to market her Sonic Screwdriver (a near-substitute). Based on your previous answers, will she enter the market? Why or why not? =

Suppose that a unique technology is developed that allowed for the production of lightsabers. The inspired entrepreneur (let's say, Lucas George) who developed the technology immediately slaps a patent on the design and hoards kyber crystals (necessary input). Demand and production costs are given below: P(Q) = 14,000 - 600Q C(Q)= 3,000+ 100² 1. How much profit does Lucas the monopolist earn? 2. Solve for the market failure of Lucas operating as a monopolist relative to what would be observed if Lucas operated as a competitive firm. Martin the Martian (not to be confused with any other martian that might be copyrighted...) observes the profits being made by Lucas. Determining that ray guns are not that different from lightsabers, Martin begins competing with Lucas: P'(Q) 12,000 - 600Q' 3. A third potential business owner, Dr. When, has watched this market carefully and is trying to decide whether or not to market her Sonic Screwdriver (a near-substitute). Based on your previous answers, will she enter the market? Why or why not? =

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.5P

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Question

Suppose that a unique technology is developed that allowed for the production of lightsabers. The inspired
entrepreneur (let's say, Lucas George) who developed the technology immediately slaps a patent on the design
and hoards kyber crystals (necessary input). Demand and production costs are given below:
P(Q) = 14,000 - 600Q
C(Q) = 3,000 + 100²
1. How much profit does Lucas the monopolist earn?
2. Solve for the market failure of Lucas operating as a monopolist relative to what would be observed if
Lucas operated as a competitive firm.
Martin the Martian (not to be confused with any other martian that might be copyrighted...) observes the
profits being made by Lucas. Determining that ray guns are not that different from lightsabers, Martin
begins competing with Lucas:
P'(Q) = 12,000 - 600Q'
3. A third potential business owner, Dr. When, has watched this market carefully and is trying to decide
whether or not to market her Sonic Screwdriver (a near-substitute). Based on your previous answers, will
she enter the market? Why or why not?

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