1.Based on market research, a film production company obtains the following information about the demand and production...
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Question:
1.Based on market research, a film production company obtains the following information about the demand and production costs of its new DVD: (3)
Demand:P=1,00010Q
Total Revenue:TR=1,000Q10Q2
Marginal Revenue:MR=1,00020Q
Marginal Cost:MC=100+10Q,
whereQQindicates the number of copies sold andPPis the price in dollars.
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 dead weight loss from monopoly.
d.Suppose, in addition to the costs above, the director of the film has to be paid. The company is considering four options:
- a flat fee of 2,000 dollars.
- 50 percent of the profits.
- 150 dollars per unit sold.
- 50 percent of the revenue
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