2.5 In 2015, Apple introduced the Apple Watch. According to HIS, the cost of producing the...
2.5 In 2015, Apple introduced the Apple Watch. According to HIS, the cost of producing the 38mm Apple Watch Sport was $84. The price was $349. What was Apple’s price/marginal cost ratio? What was its Lerner Index? If Apple is a short-run profit-maximizing monopoly, what elasticity of demand did Apple believe it faced?
Homework Answers
Price / Marginal cost ratio = ($349 / $84)
Price / Marginal Cost ratio = 4.15
Lerner Index = (P - MC) / P
Lerner index = (349 - 84) / 349
Lerner index = 0.76
Elasticity of demand = -(1 / Lerner index)
Elasticity of demand = -(1 / 0.76)
Elasticity of demand = -1.32
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2.5 In 2015, Apple introduced the Apple Watch. According to HIS,
the cost of producing the...
Exercise 4. In 2015, Apple introduced the Apple Watch. According to HIS, the cost of producing...
Exercise 4. In 2015, Apple introduced the Apple Watch. According to HIS, the cost of producing the 38mm Apple Watch Sport was $84. The price was $349. a. What was Apple's price/marginal cost ratio? b. What was its Learner Index? c. If Apple is a short-run profit-maximizing monopoly, what elasticity of demand did Apple believe it faced?
(2.5jln 2015, Apple introduced the Apple Watch. According to HIS, the cost of produc- ing the...
(2.5jln 2015, Apple introduced the Apple Watch. According to HIS, the cost of produc- ing the 38mm Apple Watch Sport was $84. The price was $349. What was Apple's price/marginal cost ratio? What was its Lern- er Index? If Apple is a short-run profit-maxi- mizing monopoly, what elasticity of demand did Apple believe it faced? C
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(2.5jln 2015, Apple introduced the Apple Watch. According to HIS, the cost of produc- ing the 38mm Apple Watch Sport was $84. The price was $349. What was Apple's price/marginal cost ratio? What was its Lern- er Index? If Apple is a short-run profit-maxi- mizing monopoly, what elasticity of demand did Apple believe it faced? C
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