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-10Q^2
Marginal Revenue: MR=1000-20Q
Marginal Cost: MC=100+10Q?
Where Q indicates the number or copies sold and P is the price in Ectenian dollars.
A. Find the price and quantity that maximizes the company's profit.
B. Find the price and quantity that would maximize social welfare.
C. Find out dead weight loss.
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 2,000 Ectenian dollars
II. 50 percent of the profits
III. 150 Ectenian dollars per unit sold
IV. 50 percent of the revenue
Demand: P=1000-10Q
Total Revenue: TR=1000Q-10Q^2
Marginal Revenue: MR=1000-20Q
Marginal Cost: MC=100+10Q?
Where Q indicates the number or copies sold and P is the price in Ectenian dollars.
A. Find the price and quantity that maximizes the company's profit.
B. Find the price and quantity that would maximize social welfare.
C. Find out dead weight loss.
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 2,000 Ectenian dollars
II. 50 percent of the profits
III. 150 Ectenian dollars per unit sold
IV. 50 percent of the revenue
1 answer:
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