Consider the following quote from the economic journal article, \"Does Antitrust
ID: 1219236 • Letter: C
Question
Consider the following quote from the economic journal article, "Does Antitrust Policy Improve Consumer Welfare? Assessing the Evidence" written by economists Robert W. Crandall and Clifford Winston: "The ideal way to determine whether consumers have benefited from antitrust policy and enforcement in the areas of monopolization, collusion and mergers would be to compare consumer welfare with and without antitrust policy, all else constant." Consider also this quote from The Economist magazine: "Blessed with scale and market knowledge, [a market leader] is better placed than potential rivals to commit itself to financing innovations." Keep these in mind as you complete the following: Macrosoft, a profit maximizing software provider, has a fully enforceable patent on word processing software. They can produce software with no fixed costs and with a constant MC of $20 /software package. The market for word processing sof tware is characterized by the demand curve:Explanation / Answer
Answer 1;
Option D.
Answer 2:
MR= 60 - 2Q = 10 ( MC)
50 = 2 Q , Q = 25 units.
Price = 60 - 25 = $35
Option D.
Answer 3:
Rise profit = 25 * 35 - 50 - 10 * 25 = 875 - 50 - 250 = 875 - 300 = $575 option B.
Answer 4:
Total surplus = 1/2 * 25 * 25 + 15 * 25 + 1/2 * 15 * 15 = $800. Option C.