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Questions - Forked Sticks, Inc., enjoys an exclusive patent on a process to accurately detect water without expensive drilling or core samples. Total and marginal revenue relations for the water detection process are:
TR = $280Q - $0.005Q2
MR = 280 - $0.01Q
Marginal costs for the process are stable at $100 (MC=AC).
A. As a monopoly, calculate Forked Stick's output, price and profits at the profit maximizing activity level.
B. What price and profit levels would prevail following expiration of copyright protection based on the assumption that perfectly competitive pricing would result?
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