Question

Based on market research, a film production company in Ectenia obtains the following information about the demand and production costs of its new DVD:

Demand: P= 1,000- 10Q

Total Revenue: TR= 1,000Q- 10Q²

Marginal Revenue: MR= 1,000- 20Q

MC= 100 + 10Q

where Q indicates the number of copies sold and P is the price in Ectenian dollars.

Complete the following table by finding the price and quantity that maximize the company’s profit and the price and quantity that maximize social welfare.

Scenario	Price (Dollars)	Quanity (DVD's)
Maximizes the companys profits	???	???
Maximizes social welfare	???	???

The deadweight loss from the monopoly is $ ___??.

Suppose, in addition to the costs above, the director of the film has to be paid. The company is considering four options:

1: A flat fee of 2,000

2. 50 percent of the profits

3. 50 ectenian dollars per unit sold

4. 50 percent of the revenue

Complete the following table by finding the price and quantity that maximize the company’s profit under each of the following options.

Options	Price (Dollars)	Quanity (DVD's)	Change in Deadweight Loss
Flat fee of 2,000 Ectentian dollars	???	???	DECREASE, INCREASE, OR NO CHANGE??
50 percent of the profits	???	???	DECREASE, INCREASE, OR NO CHANGE??
150 Ectenian dollars per unit sold	???	???	DECREASE, INCREASE, OR NO CHANGE??
50 percent of the revenue	???	???	DECREASE, INCREASE, OR NO CHANGE??

Answer 1