Question 8 Tecky Corp is a monopoly in the market of product Y. Suppose you are the marketing manager of Tecky Corp. You have gathered Some information about product Y and the cost of Tecky Corp. as shown in the table below. Quantity Unit Price $ Total Total cost $ revenue 300 1 680 680 430 560 1,120 592 440 1,320 792 4 370 1,480 1,024 280 1,400 1,304 6. 210 1,260 1,626 150 1,050 2,025 100 800 2,432 A. You are in a meeting with the CEO of Tecky Corp. The CEO asks the following question during the meeting: "We should be able to get more revenue as we sell more units. I see the total revenue rises from the quantity of 1 to 4. However, why does the total revenue start falling from the quantity of 5 onward?" Explain to the CEO why this is the case. B. Determine Tecky Corp.'s quantity of output at which the total surplus (consumer surplus + producer surplus) is maximized. Explain your answer. C. The CEO of Tecky Corp. makes the following statement before the end of the meeting: "I have heard about deadweight loss created by monopoly firms. Does our company also create deadweight loss? If so, how much is the deadweight loss in terms of dollar amount?" Answer the CEO's question. Explain your answer,
Question 8 Tecky Corp is a monopoly in the market of product Y. Suppose you are the marketing manager of Tecky Corp. You have gathered Some information about product Y and the cost of Tecky Corp. as shown in the table below. Quantity Unit Price $ Total Total cost $ revenue 300 1 680 680 430 560 1,120 592 440 1,320 792 4 370 1,480 1,024 280 1,400 1,304 6. 210 1,260 1,626 150 1,050 2,025 100 800 2,432 A. You are in a meeting with the CEO of Tecky Corp. The CEO asks the following question during the meeting: "We should be able to get more revenue as we sell more units. I see the total revenue rises from the quantity of 1 to 4. However, why does the total revenue start falling from the quantity of 5 onward?" Explain to the CEO why this is the case. B. Determine Tecky Corp.'s quantity of output at which the total surplus (consumer surplus + producer surplus) is maximized. Explain your answer. C. The CEO of Tecky Corp. makes the following statement before the end of the meeting: "I have heard about deadweight loss created by monopoly firms. Does our company also create deadweight loss? If so, how much is the deadweight loss in terms of dollar amount?" Answer the CEO's question. Explain your answer,
Chapter13: Monopoly And Antitrust
Section: Chapter Questions
Problem 6P
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