Question

13/13 30. In the past, Games Unlimited sold copies of its trademark computer game on DVD. It faced the inver m and function p= 100 - Q. and had the cost function, C = 200 + 400 It recently switched to selling its game online via the internet. Demand was unchanged, but its cost function changed as fixed cost rose to 500, while marginal cost dropped to zero: C =500 Assuming that Games Unlimited maximizes profit, what effect did moving from DVD to internet distribution have on price, quantity, consumer surplus, and profit? quantity by units. (Enter your response Moving from DVD to internet distribution (1) using an integer) Moving from DVD to internet distribution (2) integer.) price by $ (Enter your response using an by S (Enter your response with the change to internet distribution, consumer surplus (3) using an integer.) profit by $ (Enter your response using an Moving from DVD to internet distribution (4) integer.) (3) O (1) O decreases increases (2) O increases O decreases decreases increases (4) O decreases O increases

Answer 1

Initaly P= 100-8 C = 200+40S Tuofit maximtation holtion MR= MC MR= dTR PY8= ID 8-a 1OD-g TR MR MC 40 व8 10D-28=40 28=60 30 P-lo-30 P=70

Abter the hange oet 2 P = 100- C = SO0 Pouobit maxdmeugondition MR-MC MR= 100 MC= 0 wwh 1D-28O M AM 50 P=50

Moving from DVD to internet distribution increases quantity by 20 units.

Moving from DVD to internet distribution decreases price by $20.

Inatalily CS= C30-0) (loo-o) 1OD CS 70 1(20)C30) 40 Mc 4-50 mA 30 50 1OD TR-TC 40(39) =0)130)-200

PA Abter OXY S-COCS-SD-0) C100- change oft CS -CSD) CSD) 2 50 = 1,250 50 1o0 fuofitTR-TC aes Cas Cas) 50DSOD - షింాం

With the change to internal distribution, consumer surplus increases by $800.

Moving from DVD to internet distribution increases profit by $1,300.