1. Since the announcement of Metaverse, many companies have increased the investments in producing the Augmented Reality (AR) or Virtual Reality (VR) technologies for the future uses.
From the economics perspective, do you think the equilibrium prices of AR or VR will increase or decrease over time in the future? Explain your answer to the question by discussing the changes to the market supply and market demand curves for AR or VR technologies. (2 points)
2. Suppose the market demand curve for a monopolist is P = 100 – Q. The marginal cost is constant MC = $20 (=AVC). The fixed cost TFC = $200.
(1) What is the price that the monopolist should choose to maximize economic profit? You must show your calculation. (1 point)
(2) What is the (economic) profit of the monopolist? (1 point)