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

EFF EX: Joe, you said you put in these peanuts because some people ask for them, but do you realise what this rack of peanuts is costing you? JOE: It ain''t gonna cost. ''sgonna be

The three-character alpha/numeric code allocated by the Workplace of Economical Control (OFM) to recognize each account.

journal entries of a loan swap with different currency

). Calculate Karl Pearson’s coefficient of correlation from the following data , using 20 as the working mean for price and 70 as the working mean for demand: Price: 14 16 17 18 1

Design an investigation that details the following six components: Note: If one or more of the following components do not apply to your investigation, explain why each does n

1)  You are developing a sampling protocol whereby you're going to insert a probe into a turbulent flow in a circular conduit of radius R. a. Using a description of a velocity p

Introduction Background information so the reader can better grasp the analyses you are going to present. This can include anything that puts the analyses into perspective for

a millemeter ammeter of resistance 5m amp is to be used to measure a potential difference of 50volt.calculate the multiplier resistance

The  χ 2  test is one of the most popular statistical inference procedures today. It is applicable to a very large number of problems in practice which can be summed up under th