Calculate the monopoly profits and probability , Basic Statistics

Assignment Help:

Each firm in a competitive research industry can undertake one project at a constant cost, f = $960 to try and develop a certain new product. The inverse demand curve for the new product is expected to be p = 100 - 2Q, and its marginal cost of production is expected to equal $20 (with no fixed production costs).

2096_p.png

 The interest rate r is 5%. The probability ρ(n) that at least one of n firms will succeed is given by the following table:

Using these rounded figures rather than the values of the function they approximate, and using ρ (n+1) - ρ (n) as an approximation for ρ'(n), calculate,

(a) The socially optimal number of firms in an R&D race, n*.

(b) The number of firms that would race to develop the product if the winner were granted a permanent patent (monopoly profits forever). Does it make sense to grant such patents?

(c) Calculate the government prize, P that would induce the optimal amount of research.

 

 


Related Discussions:- Calculate the monopoly profits and probability

What do you mean by purchase return, What do you mean by Purchase Return? G...

What do you mean by Purchase Return? Give an example. Ans.  Sometime the goods an organization orders are not up to the mark and they are not supposed to keep or accept so th

Source of economic growth and development, Question 1: (a) Describe the...

Question 1: (a) Describe the factors that contributed to the adoption of structural adjustment programme by a majority of Least Developed Countries in the 1980s? (b) Describ

Time series, what are the importances of time series

what are the importances of time series

Revenue Recognition & Depreciation, Question 2 Pankratov Lakes is a new rec...

Question 2 Pankratov Lakes is a new recreational real estate development that consist of 500 Lake front and lake view lots. As a special incentive to the first 100 buyers of lake v

Electric fields, what is the electric field at point x if q=7*10^-6 C d=6m

what is the electric field at point x if q=7*10^-6 C d=6m

Linearity, The weight in Kg for each person was matched to their intake of ...

The weight in Kg for each person was matched to their intake of fat per day in Grams.  9 people were selected with the following results. Weight (Xi)         Fat (Yi) 45

Ex. 3-12, EXERCISE 3-12 Computing Predetermined Overhead Rates and Job Cos...

EXERCISE 3-12 Computing Predetermined Overhead Rates and Job Costs [LO1,LO2, LO3, LO7] Kody Corporation uses a job-order costing system with a plantwide overhead rate based on ma

Test of hypothesis, A toothpaste company wants to know if its new products ...

A toothpaste company wants to know if its new products increases the length of time in between dentists visits for its uses. The company sets a target of 180 days to determine if i

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd