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-10Q2 Marginal Revenue: MR=1000-20Q Marginal Cost: MC=100+10Q Where Q indicates the number of copies sold and P is the price in Ectenian dollasrs. a. Find the price and quantity that maximize the company's profit b. Find the price and quantity that would maximize social welfare c. Calculate the deadweight loss from monpoly. 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 2000 Ectenian dollars ii. 50 percent of the profits. iii. 150 Ectenian dollars per unit sold iv. 50 percent of the revenue. For each option, calculate the profit-maximizing price and quantity. Which if any of these compensation schemes would alter the deadweight loss from monopoly. Explain.
Based on
Demand :P =1000-10Q
Total Revenue : TR=1000Q-10Q2
Marginal Revenue: MR=1000-20Q
Marginal Cost: MC=100+10Q
Where Q indicates the number of copies sold and P is the price in Ectenian dollasrs.
a. Find the price and quantity that maximize the company's profit
b. Find the price and quantity that would maximize social welfare
c. Calculate the
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 2000 Ectenian dollars
ii. 50 percent of the profits.
iii. 150 Ectenian dollars per unit sold
iv. 50 percent of the revenue.
For each option, calculate the profit-maximizing price and quantity. Which if any of these compensation schemes would alter the deadweight loss from
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