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.
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
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 |
|
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)