MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Chapter 8, Problem 16PAA
To determine
Price and quantity combination of computers that should be produced to maximize firm's profit is to be ascertained.
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Problem 08-16
You are the manager of College Computers, a manufacturer of customized computers that meet the specifications required by the
local university. Over 90 percent of your clientele consists of college students. College Computers is not the only firm that builds
computers to meet this university's specifications; indeed, it competes with many manufacturers online and through traditional retail
outlets. To attract its large student clientele, College Computers runs a weekly ad in the student paper advertising its “free service after
the sale" policy in an attempt to differentiate itself from the competition. The weekly demand for computers produced by College
Computers is given by Q= 800 – 2P, and its weekly cost of producing computers is CQ) = 1,200 + 2Q².
If other firms in the industry sell PCs at $300, what price and quantity of computers should you produce to maximize your firm's profits?
Price: $
Quantity:
What long-run adjustments should you anticipate?
computers
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