This monopolist was just granted a patent by the U.S Patent Office which gives him the

exclusive right to produce X. The patent lasts forever. Assume that the profit that you calculated in question 12c can be earned at the end of each year for the life of the patent and the interest rate is 3%. This patent can be sold to another producer, who would then have the exclusive rights to product X. All prospective buyers of this patent have the same production costs as our monopolist. Whoever owns the patent, has a monopoly in the production and sale of X.

a. If the patent was purchased at the beginning of year 1 of the life of the patent, at

what price would the patent sell? ____

b. If the patent was purchased at the beginning of year 2 of the life of the patent, at

what price would the patent sell? __________