# Background: if you were in the market for a tablet computer in the spring of 2010 you had only one option: the iPad. it didn’t even come in a choice…

1). Background: if you were in the market for a tablet computer in the spring of 2010 you had only one option: the iPad. it didn’t even come in a choice of colors. Back then, Apple was basically a monopolist on the market for tablets.

Assume Apple is a monopolist in the market for iPads and faces the market demand curve Q=100-(1/3)P, where Q is in millions and P in US dollars. The marginal cost of purchasing iPads is MC=30+3Q.

What is the inverse demand curve for iPads? What is the correspondent marginal revenue curve? Represent both curves on a graph. (very important the graph).

2). What are Apple’s profit-maximizing quantity and price? Show the profit-maximizing outcome on the previous graph.

3). Suppose a new competing tablet comes along so that the market inverse demand for iPads changes to P=24Q-2Q. Holding the marginal cost equal how does the shape of the demand curve affect Apples ability to change a high price? What are now Apple’s profit-maximizing quantity and price? Draw this new outcome on the previous graph.

1). Background: if you were in the market for a tablet computer in the spring of 2010 you hadonly one option: the iPad. it didn’t even come in a choice of colors. Back then, Apple wasbasically a…