A company sells a patented software program and maximizes its profit by selling 500 licenses per month at a price of $3,000 each. The marginal cost of providing an additional license is $500. The current market outcome is Pareto efficient because the company is earning the maximum possible profit, and any move to produce more units would lower its total profit.
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A company that produces a unique type of electric scooter maximizes its profit by selling 1,000 scooters per month at a price of $2,000 each. The cost to produce one additional scooter is $1,200. There is a group of potential buyers who value a scooter at $1,500 but do not purchase one at the current price. Based on this information, which statement best analyzes the economic efficiency of this market outcome?
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A firm that produces a unique type of smart watch maximizes its profit by selling 5,000 units at a price of $400 each. The cost to produce the 5,001st watch is $250. A potential customer, who does not purchase the watch at the current price, is willing to pay up to $350 for it. Match each element of this scenario to its correct economic description.
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Calculating Unrealized Surplus
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