Chapter 9, Problem 9.9P

a)

To determine

To Graph: Royalty “supply” curve with r as a function of Q.

b)

To determine

To Calculate: the following

1. Equilibrium price
2. Quantity of copied DVDs
3. Quantity of number of DVD firms
4. Per-film royalty rate

c)

To determine

To Calculate: the following

1. Long-run Equilibrium price
2. Quantity of copied DVDs
3. Quantity of number of DVD firms
4. Per-film royalty rate

d)

To determine

To Graph: the long-run equilibrium in the DVD market and calculate the increase in producer surplus between the situations described in Part b ad part c.

e)

To determine

To Describe: the royalty supply curve graphed in part a to show that the increase in producer surplus is precisely equal to the increase in royalties paid as Q Expands incrementally from its level in part b to its level in part c.

f)

To determine

To Describe: the tax affect the market equilibrium if the demand for copied films is that given in part c.

g)

To determine

To Calculate: the burden of the tax allocated between consumers and producers and also the loss of consumer and producer surplus.

h)

To determine

To Describe: the loss of producer surplus as a result of the tax is borne completely by the film studios and the results intuitively.