Based on the market research, a recording company obtains the following informat

Question

Based on the market research, a recording company obtains the following information about the demand and production costs of its new CD: Price= 1,000-10Q Total Revenue=1,000Q-10Q squared Marginal revenue= 1,000-20Q Marginal Cost= 100+10Q Where Q indicates the number of copies sold and P is the price in cents. Suppose, in addition to the costs above, the musician on the album has to be paid. The company is considering four options: 1. a flat feee of 2,000 cents 2. 50 percent of the profits 3.150 cents oer unit sold 4. 50 percent of the revenue - For each option, calculate the profit maximizing price and quantity. Which if any, of theses compensation schemes would alter the deadweight loss from monopoly?Explain

Explanation / Answer

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