Smartphones are useless without an operating system. Similarly, an operating system is worthless without a device....

 

 

 

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Smartphones are useless without an operating system. Similarly, an operating system is worthless without a device. In such markets, consumer demand is a function of two complementary products that will be purchased together. We can thus express demand for smartphones and operating systems with the function D(P1, P2)=96-2(p₁ +P2), where p₁ is the price of a smartphone and p2 is the price of an operating system. Assume that the fixed cost of designing a smartphone is $110 and the fixed cost of programming an operating system is $50. For simplicity, also assume that the marginal costs of producing both products are negligible and that separate individual companies independently design and produce smartphones and operating systems. What is the profit-maximizing price for a smartphone? S What is the total combined price consumers pay for a smartphone with an operating system? $ How much profit does the smartphone producer make? $ How much profit does the operating system producer make? S Suppose that the smartphone producer and the operating system producer merge. What is the profit-maximizing price for the combined firm? $ How many combined systems will be produced? What are the total profits? $ Smartphones are useless without an operating system. Similarly, an operating system is worthless without a device. In such markets, consumer demand is a function of two complementary products that will be purchased together. We can thus express demand for smartphones and operating systems with the function D(P1, P2)=96-2(p₁ +P2), where p₁ is the price of a smartphone and p2 is the price of an operating system. Assume that the fixed cost of designing a smartphone is $110 and the fixed cost of programming an operating system is $50. For simplicity, also assume that the marginal costs of producing both products are negligible and that separate individual companies independently design and produce smartphones and operating systems. What is the profit-maximizing price for a smartphone? S What is the total combined price consumers pay for a smartphone with an operating system? $ How much profit does the smartphone producer make? $ How much profit does the operating system producer make? S Suppose that the smartphone producer and the operating system producer merge. What is the profit-maximizing price for the combined firm? $ How many combined systems will be produced? What are the total profits? $

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