ABC Computers is a manufacturer of customized computers that meet the specifications required by a local university. Over 90 percent of their clientele consists of college students. ABC 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, ABC 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 ABC is given by Q = 1000 – P, and its weekly cost of producing computers is TC = 2,000 + Q2. If other firms in the industry sell PCs at $600, what price and quantity of computers should ABC produce to maximize profits? What long-run adjustments should be anticipated? Explain?

Answer rating: 100% (QA)

Answer ABC computer are facing a monopolistically competitive market ABC Comput... View the full answer