Question

The studio must pay Mr. Mars 12 million to make the CD in the marginal cost of printing the CD

Show this problem graphically by graphing The demand curve. MR, and MC, labeling everything relevant, including the equilibrium price and quantity. Show consumer and producer surplus. Extra credit parentheses one point H parentheses: also show the deadweight loss of monopoly and external in your demand curve down the X axis how much with the firm produce if it was owned by the government and trying to maximize economic efficiency make total surplus as big as possible

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Answer #1

The following table shows total revenue,marginal revenue,fixed cost,marginal cost,variable cost,total cost and profit of printing CDs at different price and quantity

Price Quantity (million)

TR (Price*Quantity)

Million

Marginal Revenue

(Million)

Fixed Cost (Million)

Marginal Cost

(Million)

Veriable Cost

(Million)

Total Cost

(Million)

FC+VC

Profit/Loss

(TR-TC)

Million

14 0 0 - 12 - 0 12 -12
13 1 13 13 12 3 3 15 -2
12 2 24 11 12 3 6 18 6
11 3 33 9 12 3 9 21 12
10 4 40 7 12 3 12 24 16
9 5 45 5 12 3 15 27 18
8 6 48 3 12 3 18 30 18
7 7 49 1 12 3 21 33 16
6 8 48 -1 12 3 24 36 12
5 9 45 -3 12 3 27 39 6
4 10 40 -5 12 3 30 42 -2
  • At price $9 and $8 ,profit is maximisied and the firm will make $18million profit

Following graph shows the demand cure and marginal revenue of CDs

Perice I wtor 2 4 6 8 10 12 quantity OPPO F7

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