What price would firm choose if it wishes to maximize profit

Reference no: EM131248365

A firm has a monopoly in the production of a software application in Europe. The demand schedule in Europe is Q₁ = 120 - P, where Q₁ is the amount sold in Europe when the price is P. The firm's marginal cost is 20.

a) What price would the firm choose if it wishes to maximize profits?

b) Now suppose the firm also receives a patent for the application in the United States. The demand for the application in the United States is Q₂ = 240 - 2P, where Q₂ is the quantity sold when the price is P. Because it costs essentially nothing to transport software over the Internet, the firm must charge the same price in Europe and the United States. What price would maximize the firm's profit?

c) Use the monopoly midpoint rule (Learning-By-Doing Exercise 11.5) to explain the relationship between your answers to parts (a) and (b).

Reference no: EM131248365

Questions Cloud

Was the industry and company affected by globalization : Choose an industry in the city and examine how it shaped your home city. If the industry is significantly larger such as the auto industry, then select one company within the industry such as GM or Ford. How did the growth in the industry/ compan..

Derive a sufficient condition on a : Find the lower bound Aˆ on A such that (τ, ˆ τ) ˆ is the (symmetric) Nash outcome. - Derive a sufficient condition on A under which it is an equilibrium for a single firm to raise funds.

Beyond the pearson tutorial : There are no additional readings for this assignment, beyond the Pearson tutorial and the three textbook readings. However, some of the concepts in this module are tough, so make sure to read the materials carefully before starting on this assignm..

What is the mass of helium in the system : APSC 182 Heat Transfer - What is the final temperature and what is the mass of helium in the system? The molar mass of He is MHe = 4.00 g/mol.

What price would firm choose if it wishes to maximize profit : A firm has a monopoly in the production of a software application in Europe. The demand schedule in Europe is Q1 = 120 - P, where Q1 is the amount sold in Europe when the price is P.

Compute the annual return you realized from this bond : Suppose you bought a $1,000 par bond, 7% annual coupon payment with 5 years maturity when the market interest rate is 8%. After 1 year and immediately after you received the coupon payment you decided to sell the bond when the market interest rate..

What is the deadweight loss due to monopoly now : Compare consumer and producer surplus under monopoly versus marginal cost pricing. What is the deadweight loss due to monopoly?

Value of the franc decrease : What you can do to hedge your bet. Analyze steps you will take to avoid losing all your money should the value of the franc decrease.

Discuss ways in which deforestation is being addressed : The harmful effects of deforestation can reduce biodiversity and the ecological services provided by forests on a global scale. Characteristics of deforestation include acceleration of flooding in surrounding areas, regional climate change from ex..

User Account

All Pages