Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 15, Problem 10PA
Subpart (a):
To determine
The profit maximization, dead weight loss and social welfare.
Subpart (b):
To determine
The profit maximization, dead weight loss and social welfare.
Subpart (c):
To determine
Dead weight loss.
Subpart (d):
To determine
The profit maximization, dead weight loss and social welfare.
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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 =1000-10Q
Total Revenue : TR=1000Q-10Q2
Marginal Revenue: MR=1000-20Q
Marginal Cost: MC=100+10Q
Where Q indicates the number of copies sold and P is the price in Ectenian dollasrs.
a. Find the price and quantity that maximize the company's profit
b. Find the price and quantity that would maximize social welfare
c. Calculate the deadweight loss from monpoly.
d. Suppose in addition to the costs above. the director of the film has to be paid. The company is considering four options
i. a flat fee of 2000 Ectenian dollars
ii. 50 percent of the profits.
iii. 150 Ectenian dollars per unit sold
iv. 50 percent of the revenue.
For each option, calculate the profit-maximizing price and quantity. Which if any of these compensation schemes would alter the deadweight loss from monopoly. Explain.
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= 1,200 - 10Q
Total Revenue:
TR = 1,2000 - 10Q
Marginal Revenue: MR 1,200 - 200
Marginal Cost:
MC = 300 + 100
where Q indicates the number of copies sold and Pis 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
weifare.
Price
Quantity
Scenario
(Dollars)
(DVDs)
Maximizes the company's profit
Maximizes social weifare
The deadweight loss from the monopoly is S
Suppose, in addition to the foregoing costs, the director of the fim has to be paid. The company is considering four options:
09.
Chapter 15 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
Ch. 15.1 - Prob. 1QQCh. 15.2 - Prob. 2QQCh. 15.3 - Prob. 3QQCh. 15.4 - Prob. 4QQCh. 15.5 - Prob. 5QQCh. 15 - Prob. 1CQQCh. 15 - Prob. 2CQQCh. 15 - Prob. 3CQQCh. 15 - Prob. 4CQQCh. 15 - Prob. 5CQQ
Ch. 15 - Prob. 6CQQCh. 15 - Prob. 1QRCh. 15 - Prob. 2QRCh. 15 - Prob. 3QRCh. 15 - Prob. 4QRCh. 15 - Prob. 5QRCh. 15 - Prob. 6QRCh. 15 - Prob. 7QRCh. 15 - Prob. 8QRCh. 15 - Prob. 1PACh. 15 - Prob. 2PACh. 15 - Prob. 3PACh. 15 - Prob. 4PACh. 15 - Prob. 5PACh. 15 - Prob. 6PACh. 15 - Prob. 7PACh. 15 - Prob. 8PACh. 15 - Prob. 9PACh. 15 - Prob. 10PACh. 15 - Prob. 11PACh. 15 - Prob. 12PA
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