13.7. WINTEL. Consider the following highly simplified picture of the personal com- puter industry. A large number of price-taking firms assemble computer systems; call them "computer OEMs" (Original Equipment Manufacturers). Each of these firms must buy three inputs for each computer system that it sells: (1) a variety of components that are themselves supplied competitively and collectively cost the computer OEM $500 per computer; (2) the Windows operating system, available only from Microsoft, at a price P, to be discussed below; and (3) a Pentium microprocessor, available only from Intel, at a price p,, also to be discussed below. Since each computer system requires pre- cisely one operating system and one microprocessor, the marginal cost of a computer to an OEM is 500 + PM + P. Assume that competition among OEMs drives the price of a computer system down to marginal cost, so we have p = 500+ PM + P₁, where p is the price of a computer system. The demand for computer systems is given by Q=100,000,000 - 50,000 p. Microsoft is the sole supplier of the Windows operating system for personal computers. The marginal cost to Microsoft of providing Windows 2000rs

13.7. WINTEL. Consider the following highly simplified picture of the personal com- puter industry. A large number of price-taking firms assemble computer systems; call them "computer OEMs" (Original Equipment Manufacturers). Each of these firms must buy three inputs for each computer system that it sells: (1) a variety of components that are themselves supplied competitively and collectively cost the computer OEM $500 per computer; (2) the Windows operating system, available only from Microsoft, at a price P, to be discussed below; and (3) a Pentium microprocessor, available only from Intel, at a price p,, also to be discussed below. Since each computer system requires pre- cisely one operating system and one microprocessor, the marginal cost of a computer to an OEM is 500 + PM + P. Assume that competition among OEMs drives the price of a computer system down to marginal cost, so we have p = 500+ PM + P₁, where p is the price of a computer system. The demand for computer systems is given by Q=100,000,000 - 50,000 p. Microsoft is the sole supplier of the Windows operating system for personal computers. The marginal cost to Microsoft of providing Windows 2000rs

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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