Question: 1. Xena is a software program produced by Xenoid. Each year Xenoid produces an upgrade that costs $300,000 to produce. It costs nothing to allow

1. Xena is a software program produced by Xenoid. Each year Xenoid produces an upgrade that costs $300,000 to produce. It costs nothing to allow customers to download it from the company’s website. The demand schedule for the upgrade is shown in the accompanying table.

a. What is the efficient price to a consumer of this upgrade? Explain.

b. What is the lowest price at which Xenoid is willing to produce and sell the upgrade?

Draw the demand curve and show the loss of total surplus that occurs when Xenoid charges this price compared to the efficient price.

Price of upgrade $180 Quantity of upgrades demanded 1,700 150 2,000 120

Price of upgrade $180 Quantity of upgrades demanded 1,700 150 2,000 120 2,300 90 2,600 0 3,500

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