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e) Consider the case that the developer of the App wants to maximize the overall welfare and not just his profit. Determine price and quantity. What is the profit? Show CS and PS. f) Draw the welfare losses of the Monopoly, which occur opposite to perfect competition. Calculate the net welfare losses.

e) Consider the case that the developer of the App wants to maximize the overall welfare and not just his profit. Determine price and quantity. What is the profit? Show CS and PS. f) Draw the welfare losses of the Monopoly, which occur opposite to perfect competition. Calculate the net welfare losses.

Exploring Economics
Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter13: Monopoly And Antitrust
Section: Chapter Questions
Problem 7P
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5(Chapter 11 Monopoly) The inverse demand for an app is P = PD (Q) = 30 - 0,4. Q. The inverse demand function indicated the price P, were the quantity Q will be sold. The app is sold just from the app developer. The programing of the app creats fixed costs of 420. The marginal costs are 2. a) Draw the demand curve b) Calculate the marginal revenue and the average cost function. Draw the marginal revenue and marginal cost function in the diagram of a). c) Determine the profit maximizing quantity and price. What are the average costs? What is the profit? Draw the average cost curve and the profit in the diagram. Show the consumer surplus (CS) and producer surplus (PS). d) What are the price and quantity if you a have fixed costs of 490? What is the profit? e) Consider the case that the developer of the App wants to maximize the overall welfare and not just his profit. Determine price and quantity. What is the profit? Show CS and PS. f) Draw the welfare losses of the Monopoly, which occur opposite to perfect competition. Calculate the net welfare losses.
Transcribed Image Text:5(Chapter 11 Monopoly) The inverse demand for an app is P = PD (Q) = 30 - 0,4. Q. The inverse demand function indicated the price P, were the quantity Q will be sold. The app is sold just from the app developer. The programing of the app creats fixed costs of 420. The marginal costs are 2. a) Draw the demand curve b) Calculate the marginal revenue and the average cost function. Draw the marginal revenue and marginal cost function in the diagram of a). c) Determine the profit maximizing quantity and price. What are the average costs? What is the profit? Draw the average cost curve and the profit in the diagram. Show the consumer surplus (CS) and producer surplus (PS). d) What are the price and quantity if you a have fixed costs of 490? What is the profit? e) Consider the case that the developer of the App wants to maximize the overall welfare and not just his profit. Determine price and quantity. What is the profit? Show CS and PS. f) Draw the welfare losses of the Monopoly, which occur opposite to perfect competition. Calculate the net welfare losses.
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