Based on market research, a recording company obtains the following information about the demand and production costs of its new CD:
Price=1000-10Q
Total Revenue=1000Q-10Q^2
Marginal Revenue=1000-20Q
Marginal Cost=100+10Q
(P is the price in cents)
a.Find the price P and quantity Q that maximizes the company's profit
b.Find P and Q that would maximize social welfare
c.Calculate the deadweight loss from monopoly
d.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 fee of 2,0000 cents
2. 50%of the profits
3. 150 cents per unit sold
4. 50%of the revenue
For each option calculate the profit maximizing P and Q. Which if any of these schemes would alter the deadweight loss from monopoly? Explain.