A patent gave Sony a legal monopoly to produce a robot dog called Aibo ("eye-BO"). The Chihuahua-size pooch robot can sit, beg, chase balls, dance, and play an electronic tune. When Sony started selling the toy in July 1999, it announced that it would sell 3,000 Aibo robots in Japan for about $2,000 each and a limited litter of 2,000 in the United States for $2,500 each. Suppose that Sony's marginal cost of producing Aibos is $500. Its inverse demand curve is Pj = 3500 - 0.5Qj in Japan and Pa = 4500 - Qa in the United States. Solve for the equilibrium prices and quantities (assuming that U.S. customers cannot buy robots from Japan). The equilibrium quantity in Japan is 3000 and the price, pj, is $ 2000. (round your answers to the nearest integer) The equilibrium quantity in the U.S. is 2000 and the price, pa, is $ 2500. (round your answers to the nearest integer) Show how the profit-maximizing price ratio depends on the elasticities of demand in the two countries. Pj Pa 1+1/a 2,000 1+1/-1.25 2,500 1+1/ 1+1/-1.33 (enter the price elasticities at the profit-maximizing price and quantity for each country, rounded to two decimal places) What are the deadweight losses in each country, and in which is the loss from monopoly pricing greater? The deadweight loss in Japan is $ The deadweight loss in the U.S. is $ million. (round your answer to two decimal places) million. (round your answer to two decimal places)
A patent gave Sony a legal monopoly to produce a robot dog called Aibo ("eye-BO"). The Chihuahua-size pooch robot can sit, beg, chase balls, dance, and play an electronic tune. When Sony started selling the toy in July 1999, it announced that it would sell 3,000 Aibo robots in Japan for about $2,000 each and a limited litter of 2,000 in the United States for $2,500 each. Suppose that Sony's marginal cost of producing Aibos is $500. Its inverse demand curve is Pj = 3500 - 0.5Qj in Japan and Pa = 4500 - Qa in the United States. Solve for the equilibrium prices and quantities (assuming that U.S. customers cannot buy robots from Japan). The equilibrium quantity in Japan is 3000 and the price, pj, is $ 2000. (round your answers to the nearest integer) The equilibrium quantity in the U.S. is 2000 and the price, pa, is $ 2500. (round your answers to the nearest integer) Show how the profit-maximizing price ratio depends on the elasticities of demand in the two countries. Pj Pa 1+1/a 2,000 1+1/-1.25 2,500 1+1/ 1+1/-1.33 (enter the price elasticities at the profit-maximizing price and quantity for each country, rounded to two decimal places) What are the deadweight losses in each country, and in which is the loss from monopoly pricing greater? The deadweight loss in Japan is $ The deadweight loss in the U.S. is $ million. (round your answer to two decimal places) million. (round your answer to two decimal places)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A patent gave Sony a legal monopoly to produce a robot dog called Aibo ("eye-BO"). The Chihuahua-size pooch robot can sit, beg, chase balls, dance, and play an electronic tune. When
Sony started selling the toy in July 1999, it announced that it would sell 3,000 Aibo robots in Japan for about $2,000 each and a limited litter of 2,000 in the United States for $2,500 each.
Suppose that Sony's marginal cost of producing Aibos is $500. Its inverse demand curve is
Pj = 3500 - 0.5Qj
in Japan and
Pa = 4500 - Qa
in the United States.
Solve for the equilibrium prices and quantities (assuming that U.S. customers cannot buy robots from Japan).
The equilibrium quantity in Japan is 3000 and the price, pj, is $ 2000. (round your answers to the nearest integer)
The equilibrium quantity in the U.S. is 2000 and the price, pa, is $ 2500. (round your answers to the nearest integer)
Show how the profit-maximizing price ratio depends on the elasticities of demand in the two countries.
Pj
Pa
1+1/a
2,000
1+1/-1.25
2,500 1+1/ 1+1/-1.33
(enter the price elasticities at the profit-maximizing price and quantity for each country, rounded to two decimal places)
What are the deadweight losses in each country, and in which is the loss from monopoly pricing greater?
The deadweight loss in Japan is $
The deadweight loss in the U.S. is $
million. (round your answer to two decimal places)
million. (round your answer to two decimal places)
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