The Pear Computer Company just developed a totally revolutionary new personal computer. Pear estimates that it will take competitors at least two years to produce equivalent products. The demand function for the computer is estimated to be P=2,500-500Q where QQ is millions of computers. The marginal (and average variable) cost of producing the computer is $900. Assuming Pear acts as a monopolist in its market, the profit-maximizing price and output levels are $ per computer and million computers, respectively. The total contribution to profits and fixed costs at this output level is $ million.
The Pear Computer Company just developed a totally revolutionary new personal computer. Pear estimates that it will take competitors at least two years to produce equivalent products. The demand function for the computer is estimated to be
P=2,500-500Q
where QQ is millions of computers. The marginal (and average variable) cost of producing the computer is $900.
Assuming Pear acts as a monopolist in its market, the profit-maximizing price and output levels are $ per computer and million computers, respectively. The total contribution to profits and fixed costs at this output level is $ million.
Time Period Price Units sold Total Contri.
| 1 | 2,400 | ||
| 2 | 2,200 | ||
| 3 | 2,000 | ||
| 4 | 1,800 | ||
| 5 | 1,700 | ||
| 6 | 1,600 | ||
| 7 | 1,500 | ||
| 8 | 1,400 | ||
| 9 | 1,300 | ||
| 10 | 1,200 |
Over the 10 periods, the total contribution to profits and fixed costs from price skimming is $ million.
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|
Time Period
|
Price
|
Quantity Sold
|
Total Contribution
|
|---|---|---|---|
|
($)
|
(Million)
|
($ Million)
|
|
| 1 | 2,400 | 0.2 |
|
| 2 | 2,200 | 0.2 |
|
| 3 | 2,000 | 0.2 |
|
| 4 | 1,800 | 0.2 |
|
| 5 | 1,700 | 0.2 |
|
| 6 | 1,600 | 0.2 |
|
| 7 | 1,500 | 0.2 |
|
| 8 | 1,400 | 0.2 |
|
| 9 | 1,300 | 0.2 |
|
| 10 | 1,200 | 0.2 |
|
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