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More quiz 1 potential questions

More quiz 1 potential questions - 1 Consider a Patented...

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1. Consider a Patented Process Innovation Assume initial price of a competitively produced consumer good is P 0 . The innovation reduces cost of producing a consumer good from c to c‘: D= A - bP P Q MR c c' Q 0 A P 0 Q c P c What is patentee’s optimal price? P 0 What is consumption of the good at that price? Q 0 What is consumer surplus from the innovation at optimal price? What is profit from the innovation at optimal price? What is deadweight loss at optimal price? (Mark on figure.) What is consumer surplus if patent has expired?
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3) Assume the demand for a good that is a potential product innovation is predicted to be with certainty:Q=100-0.01P. a) If the production of the good is costless and the good is offered by the government (i.e. is offered as a public good), what is the Consumer Surplus? 2. Consider a Patented Process Innovation Assume initially the innovator has a monopoly of the product market The innovation reduces cost of producing a consumer good from c to c‘: D= A - bP P Q MR c c' Q 0 A P 0 Q c P c What is monopolist’s optimal price before the cost reduction?
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