Question: UCTech has developed the first useful quantum computer. Because it is the only firm able to produce it, and there are no close substitutes for

 UCTech has developed the first useful quantum computer. Because it is

UCTech has developed the first useful quantum computer. Because it is the only firm able to produce it, and there are no close substitutes for some specific applications, we will model UCTech as a monopolist. They might offer two commercial versions: the basic one, with 100 qubits (denoted by g = 1), and the advanced one, with 200 qubits (g = 2). UCTech's marketing team estimates that there are three types of customers: highend users like gargantuan tech companies (H), mid level users like research universities (M), and low-end users like quantum gamers (L). The table below shows the constant marginal costs of each version, the willingness to pay WTP,-g of individual i E (L, M, H} for version g E {1, 2}, and the total number of users of each type. Version Cost WTPLg WTPMg WTPHg 100 qubits (g = 1) 1 0.8 3 4 200 qubits (g = 2) 4 2 5 20 N of individuals 1,000,000 100 10 Utility of each individual is u,-(g) = WTP,-g )93 if the individual purchases good g at price pg. If no purchase is made, utility is zero. Throughout the question, assume that the firm is not allowed to set different prices to different types of individuals (but it's ok to have different prices for different versions). Also, assume that the firm knows all of the information in the table above

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!