Reference no: EM132191800

Shaughnessy Consulting, LLC currently enjoys a patent (MONOPOLY) on software that estimates economic damages for clients involved in personal injury lawsuits. Demand for my software is QD=121.3-2P I can produce a copy of the software for $0.65 per unit (constant cost).

My patent expires in a year, and I know other economic consultants will produce competing software. (entering competitive market) 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.)

Select one:

a. Q=65

Q=65; P=$28.15

P=$28.15; CS

CS increases by $1,250 (from $900 to $2,150)

b. Q=120

Q=120; P=$0.65

P=$0.65; CS

CS increases by $2,700 (from $900 to $3,600)

c. Q=145

Q=145; P=$13.15

P=$13.15; CS

CS increases by $800 (from $500 to $1,300)

d. Q=80

Q=80; P=$20.65

P=$20.65; CS

CS increases by $300 (from $250 to $550)

How much deadweight loss is created by my patent and monopoly in this software?

Select one:

a. $900

b. $1,600

c. $545

d. $650