Log in
Economics
2
answers
0
watching
150
views

Suppose that the potential demand for a piece of software is given by QD(P) = 4,000 -4P. The software will cost $50,000 to develop. Once it is developed, the software can be distributed over the internet.

(a) Assume the software has been developed. Find the profit-maximizing price and quantity if the software producer is a monopolist.

Pm =

Qm =

(b) Find the consumer surplus (CS) at the price and quantity from part (a)

CS =

Assume the software has been developed. Find the equilibrium price and quantity for the software in a competitive market.

PCE =

QCE =

(d) Find the consumer surplus (CS) at the price and quantity from part (c).

CS =

(e) What will the consumer surplus actually be if the software developer knows there will be a competitive market? Explain your answer.

CS =

Watch
2
answers
0
watching
150
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share
Chika Ilonah
Chika IlonahLv10
28 Sep 2019
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

Suppose that in the market for aluminum rods the demand and supply functions are given by:
Demand Function: QD = 300 – 2.5PSupply Function: QS = 5P - 15
Where P = price per aluminum rod and Q = number of aluminum rods
(a) Find the initial equilibrium price and quantity. Calculate the initial consumer surplus (CS) andproducer surplus (PS).
(b) Suppose the government imposes a price floor on aluminum rods. Aluminum rods must now sell for$50 per unit. Will there be a surplus or a shortage of aluminum rods at the price floor? Calculate theamount of the surplus or shortage.
(c) Calculate the consumer surplus (CS) and producer surplus (PS) after the imposition of the price floor.Calculate the deadweight loss associated with the imposition of the price floor.
(d) Are households better off or worse off after the imposition of the price floor? Are firms better off orworse off after the imposition of the price floor? Use your answers from Parts (a) and (c) to explain youranswer.

The market demand for gadgets is given by Qd=100-3p, where Qd is the quantity of gadgets demanded and p is the price of a gadget in dollars. The market supply is given byQs= p, where Qs is the quantity of gadgets supplied. The production of gadgets releases a toxic effluent into the water supply. The marginal external cost can be described by MEC(Q)= 2Q.

a) Compute consumer surplus, producer surplus, and the cost of pollution at the market equilibrium.

b) Compute consumer surplus, producer surplus, and the cost of pollution at the social optimum.

c) Suppose the government is considering imposing a tax of $T per unit on the producers. Find the level of the tax that ensures the socially optimal amount of gadgets will be produced in a competitive equilibrium.

The market demand for gadgets is given byQD=100-3p , where QD is the quantity of gadgets demanded and p is the price of a gadget in dollars. The market supply is given byQ S=p , where QS is the quantity of gadgets supplied. The production of gadgets releases a toxic effluent into the water supply. The marginal external cost can be described by MEC Q=2Q. a) Compute consumer surplus, producer surplus and the cost pf pollution in the market equilibrium. b) Compute consumer surplus, producer surplus and the cost pf pollution in the social optimum. c) Suppose the government is considering imposing a tax of $T per unit on the producers. Find the level of the tax that ensures the socially optimal amount of gadgets will be produced in a competitive equilibrium.

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in