Reference no: EM13158292

The Pear Computer Company 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 is estimated to be

P = 2,500 - 0.0005Q

The marginal (and average variable) cost of producing the computer is $900.

a. Compute the profit-maximizing price and output levels assuming Pear acts as a monopolist for its product.

b. Determine the total contribution to profits and fixed costs from the solution generated in Part (a).