Calculate the monopoly profits and probability , Basic Statistics

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.

 

 

Posted Date: 3/1/2013 5:04:05 AM | Location : United States







Related Discussions:- Calculate the monopoly profits and probability , Assignment Help, Ask Question on Calculate the monopoly profits and probability , Get Answer, Expert's Help, Calculate the monopoly profits and probability Discussions

Write discussion on Calculate the monopoly profits and probability
Your posts are moderated
Related Questions
A, Explain how a person can be free to choose but his or her choices are casually determined by past event B , Draw the casual tree for newcomb's problem when Eve can't perfectl

Questions In a regression analysis, a nurse researcher found a correlation of .82 between pain relief scores and satisfaction with nursing care.  She also calculated the follow

The Rohr Company''s old equipment for making subassemblies is worn out. The company is considering two alternatives: a) Completely replacing the old equipment with new equipment

Standard Deviation: The standard deviation is a gauge of the variance, or dispersion, of the market return over its average returns. Thus Standard Deviation gives an insight of tot

What is F2 Test, These tests were based on the assumption that the samples were drawn from normally distributed populations, or more accurately that the sample means were normally

how cost classification can helpful for planning, controlling and decision making


A.Austria invested cash $1,000 and a type writer $2,500


two object are on the same level we release the first one vertically and the other one with an initial velocity which object will land first?