Shaughnessy Consulting, LLC currently enjoys a patent on software that estimates economic damages for clients involved in personal injury lawsuits. Demand for my software isQD = 287.5 – 12.5P. Creating the software cost me about $985 in development and coding. I can produce a copy of the software for $11 per unit (constant cost).How many copies of the software should I attempt to sell? At what price should I sell it? How much profit would I make?My patent expires in a year, and I know other economic consultants will produce competing software. What quantity and price will result once competing software emerges? How much consumer surplus will my clients (lawyers) gain once the competitors enter? (For measuring consumer surplus, recall that area of a triangle = ½ * base * height.)How much deadweight loss is created by my patent and monopoly in this software?

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Answered: Shaughnessy Consulting, LLC currently…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13A: Entry Deterrence And Accommodation Games

Section: Chapter Questions

Problem 2E

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Shaughnessy Consulting, LLC currently enjoys a patent on software that estimates economic damages for clients involved in personal injury lawsuits. Demand for my software is

Q_D = 287.5 – 12.5P. Creating the software cost me about $985 in development and coding. I can produce a copy of the software for $11 per unit (constant cost).

How many copies of the software should I attempt to sell? At what price should I sell it? How much profit would I make?
My patent expires in a year, and I know other economic consultants will produce competing software. What quantity and price will result once competing software emerges? How much consumer surplus will my clients (lawyers) gain once the competitors enter? (For measuring consumer surplus, recall that area of a triangle = ½ * base * height.)
How much deadweight loss is created by my patent and monopoly in this software?

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