A Computer Software Firm Has Developed a New and Better

question 71

Multiple Choice

A computer software firm has developed a new and better spreadsheet program.The program is protected by copyrights, so the firm can act as a monopolist for this product.The demand function for the spreadsheet is q = 50,000 - 100p.Any single consumer will want only one copy.The marginal cost of producing and distributing another copy and its documentation is just $10 per copy.If the company sells this software at the profit-maximizing monopoly price, the number of consumers who would not buy the software at the monopoly price but would be willing to pay at least the marginal cost is

• A)50,000.
• B)12,000.
• C)14,000.
• D)25,000.
• E)None of the above.

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Definitions:

Experience-curve Pricing

A pricing strategy based on the concept that unit production costs decline by a fixed percentage each time production experience doubles.

Cost-plus Pricing

A pricing strategy where a fixed percentage is added to the total cost of producing a product or service to determine its selling price.

Experience-curve Pricing

A pricing strategy that relies on reducing costs and setting prices based on gained efficiencies and experience over time.

Experience-curve Pricing

A pricing strategy that leverages reduced costs obtained through increased production experience to set lower prices aimed at gaining market share.