- Because Of A Patent Company X Has A Monopoly On A New Product Which It Brands Kohi Company X Is A Profit Maximizing F 1 (258.89 KiB) Viewed 36 times
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Because of a patent, Company X has a monopoly on a new product, which it brands Kohi) Company X is a profit-maximizing firm and is incurring economic losses in the short run. elusta MC ATC. a. Draw a graph of Company X's market for Kohi. i. Label the profit-maximizing price (Pm). Label the profit-maximizing quantity (Qm). ii. cs PM Pe QM. QE e. On your graph from part (a), label the allocatively efficient price (Pe) and quantity (Qe). Allocative effrient = P = MR=MC f. Is Company X producing in the elastic or inelastic range of its product's demand? Explain. monoplashz: MR70 inelasti MREZ g. Based on the information from part (d), what is the total revenue of Company X? h. Assume that Company X becomes able to perfectly price discriminate. i. What would happen to its output? ease ii. What would happen to consumer surplus? dappear inelasti? b. Shade the area of consumer surplus. Why would Company X continue to operate in the short run despite earning negative economie profit? Thit covers fixed cost, P> AVC. d. Assume that Pm = $8 and the average total cost at the profit-maximizing quantity is $10. If the firm is incurring $400 in economic losses, how many units of Kohi is it producing? = 400 ха 2Q=400.Q=28 D $10x 200 MR 200-$200 -$2.000