1. Manufacturer of electronics products has just developed handheld computer (monopoly). The cost schedule for producing these computers are given below.
Total Output
|
Price $
|
ATC
|
0
|
1650
|
$0
|
1
|
1750
|
2281
|
2
|
1490
|
1634
|
3
|
1410
|
1342
|
4
|
1330
|
1156
|
5
|
1250
|
1025
|
6
|
1170
|
933
|
7
|
1090
|
872
|
8
|
1010
|
839
|
9
|
930
|
832
|
10
|
850
|
850
|
a) Compute TR, MR, and TC.
b) What price must firm charge if it wants to maximize it profit in short run?
2. As more than 90% of personal computer users buy Microsoft Window and their demands are very inelastic, Microsoft has strong monopoly power. Microsoft's profit-maximizing monopoly price for Window XP/Vista is between $900 and $2,000.
a) Which is amount Microsoft would charge if it acted like regular monopolist, so why does Microsoft charge only $100-300 for Window XP/Vista?
b) Does Microsoft not maximize its profit?
c) Do you know other suitable examples that monopoly producers charge less than profit-maximizing monopoly prices? Give your group's response to this question.