Graph and choose the correct answer: Options: Blank 1: (200,000 , 400,000 , 695,
ID: 1095559 • Letter: G
Question
Graph and choose the correct answer:
Options:
Blank 1: (200,000 , 400,000 , 695,000 , 800,000)
Blank 2:($0 , $23 , $40 , $80)
Blank 3: (200,000 , 400,000 , 690,000 , 800,000)
4. Monopoly In the market for Intellectual property Epticon is launching some new software. Developing the new software involves a relatively high fixed cost of roughly $16 million. Epticon?s marginal cost of producing the software is zero. Having obtained a copyright, Epticon acts as a monopolist in the market for its new software. The following graph shows the demand, marginal revenue (MR), and average cost (AC) curves for the software. Keeping in mind that the marginal cost (MC) of production is zero, the profit-maximizing quantity of the software is 400,000 units, and the profit-maximizing price is $80 per unit of software. On the graph, use the green triangle (triangle symbols) to shade the area that represents consumer surplus at Epticon?s profit-maximizing price. Then use the red rectangle (cross symbols) to shade the area that represents total cost at the profit-maximizing output level. Finally, use the orange rectangle (square symbols) to shade the area that represents Epticon?s profit at the profit-maximizing price and quantity. The socially optimal, or efficient, quantity of software is 800,000 units. Suppose that Epticon incurs the fixed cost of developing the software and sells the profit-maximizing quantity at the profit-maximizing price. Consider all of the consumers with a zero or greater willingness to pay who did not purchase the software at the profit-maximizing price. Assume that all of these consumers make pirated copies of the software for free. On the previous graph, use the tan triangle (dash symbols) to show the gain in total surplus from the software piracy. True or False: If the government requires Epticon to set the price of its new software equal to marginal cost, the firm will incur a loss. True FalseExplanation / Answer
1) TRUE
BLANK 1 -- 400,000
blank 2---- 80
blank3 ----80000
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