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. Total cost $ Unit Price $ Quantity Total revenue $ 0. 300 430 680 680 1 560 1,120 592 3. 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 I 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. 2. Determine Tecky Corp.'s quantity of output at which the total surplus (consumer surplus + B. 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.
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. Total cost $ Unit Price $ Quantity Total revenue $ 0. 300 430 680 680 1 560 1,120 592 3. 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 I 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. 2. Determine Tecky Corp.'s quantity of output at which the total surplus (consumer surplus + B. 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.
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
Chapter11: Price And Output Determination: Monopoly And Dominant Firms
Section: Chapter Questions
Problem 4E
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Transcribed Image Text: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.
Total cost $
Unit Price $
Quantity
Total revenue $
0.
300
430
680
680
1
560
1,120
592
3.
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 I 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.
2.
Transcribed Image Text:Determine Tecky Corp.'s quantity of output at which the total surplus (consumer surplus +
B.
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.
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