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In: Economics

3. When Apple introduced its first portable media player, the iPod, its constant marginal cost of...

3. When Apple introduced its first portable media player, the iPod, its constant marginal cost of producing the top-of-the-line model was $200 (iSuppli), its fixed cost was approximately $736 million, and we estimate that its inverse demand function was p = 600 - 25Q, where Q is units measured in millions. Be sure to express your answers in the proper units, where needed.

a. What was Apple's average cost function?

b. Assuming that Apple was maximizing its short-run monopoly profit, what was its marginal revenue function?

c. What were its profit-maximizing price, quantity, profit and Lerner Index?

d. What was the price elasticity of demand at the profit maximizing level?

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Rahul Sunny answered 2 years ago
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