The Pear Computer Company has just developed a totally revolutionary new persona

Question

The Pear Computer Company has just developed a totally revolutionary new personal computer. It estimates that it will take competitors at least two years to produce equivalent products. The demand function for the computer has been estimated to be P = 2,500 - 0.0005Q. The marginal cost of producing computers is constant at $900. a. Compute the profit-maximizing price and output levels assuming that Pear acts like a monopolist. b. Determine the total contribution to profits and fixed costs at these levels. Pear Computer is considering an alternative pricing strategy of sliding down the demand curve. It plans to set the following schedule of prices over the coming two years. Time Period Price Quantity Sold 1 $2,400 200,000 2 2,200 200,000 3 2,000 200,000 4 1,800 200,000 5 1,700 200,000 6 1,600 200,000 7 1,500 200,000 8 1,400 200,000 c. Calculate the contribution to profit and overhead for each of the eight time periods. d. Compare your results in part (c) with your answer in part (b). e. How would you classify the "sliding down the demand curve" pricing strategy? Explain its major advantages and disadvantages.

Explanation / Answer

Time Period Price Quantity Sold 1 $2,400 200,000 2 2,200 200,000 3 2,000 200,000 4 1,800 200,000 5 1,700 200,000 6 1,600 200,000 7 1,500 200,000 8 1,400 200,000 this part of data is confusing ill help you if you can tabulate the data please it will inconvinient for both of us if i come out with a wrong answer

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