Tecky Corp is a monopoly in the market of product Y. Suppose you are the marketing manager of Tecky Corp. You have gathered some information about product Y and the cost of Tecky Corp. as shown in the table below. Total cost $ Unit Price $ Total revenue $ Quantity 300 1 680 680 430 560 1,120 592 440 1,320 3 792 4 370 1,480 1,024 1,400 280 1,304 1,260 210 1,626 1,050 150 2,025 100 800 2,432 You are in a meeting with the CEO of Tecky Corp. The CEO asks the following question A. during the meeting: "We should be able to get more revenue as we sell more units. I see the total revenue rises from the quantity of 1 to 4. However, why does the total revenue start falling from the quantity of 5 onward?" Explain to the CEO why this is the case. Determine Tecky Corp.'s quantity of output at which the total surplus (consumer surplus + B. producer surplus) is maximized. Explain your answer. C. The CEO of Tecky Corp. makes the following statement before the end of the meeting: "I have heard about deadweight loss created by monopoly firms. Does our company also create deadweight loss? If so, how much is the deadweight loss in terms of dollar amount?" Answer the CEO's question. Explain your answer.
Tecky Corp is a monopoly in the market of product Y. Suppose you are the marketing manager of Tecky Corp. You have gathered some information about product Y and the cost of Tecky Corp. as shown in the table below. Total cost $ Unit Price $ Total revenue $ Quantity 300 1 680 680 430 560 1,120 592 440 1,320 3 792 4 370 1,480 1,024 1,400 280 1,304 1,260 210 1,626 1,050 150 2,025 100 800 2,432 You are in a meeting with the CEO of Tecky Corp. The CEO asks the following question A. during the meeting: "We should be able to get more revenue as we sell more units. I see the total revenue rises from the quantity of 1 to 4. However, why does the total revenue start falling from the quantity of 5 onward?" Explain to the CEO why this is the case. Determine Tecky Corp.'s quantity of output at which the total surplus (consumer surplus + B. producer surplus) is maximized. Explain your answer. C. The CEO of Tecky Corp. makes the following statement before the end of the meeting: "I have heard about deadweight loss created by monopoly firms. Does our company also create deadweight loss? If so, how much is the deadweight loss in terms of dollar amount?" Answer the CEO's question. Explain your answer.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:Tecky Corp is a monopoly in the market of product Y. Suppose you are the marketing manager
of Tecky Corp. You have gathered some information about product Y and the cost of Tecky Corp.
as shown in the table below.
Total cost $
Unit Price $
Total revenue $
Quantity
300
1
680
680
430
560
1,120
592
440
1,320
3
792
4
370
1,480
1,024
1,400
280
1,304
1,260
210
1,626
1,050
150
2,025
100
800
2,432
You are in a meeting with the CEO of Tecky Corp. The CEO asks the following question
A.
during the meeting:
"We should be able to get more revenue as we sell more units. I see the total revenue rises
from the quantity of 1 to 4. However, why does the total revenue start falling from the
quantity of 5 onward?"
Explain to the CEO why this is the case.
Transcribed Image Text:Determine Tecky Corp.'s quantity of output at which the total surplus (consumer surplus +
B.
producer surplus) is maximized. Explain your answer.
C.
The CEO of Tecky Corp. makes the following statement before the end of the meeting:
"I have heard about deadweight loss created by monopoly firms. Does our company also
create deadweight loss? If so, how much is the deadweight loss in terms of dollar amount?"
Answer the CEO's question. Explain your answer.
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