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    market structure

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    Please step me through the calculations & logic behind this situation:

    You are the CEO of PC Warehouse, a firm which manufactures customized computers to meet the specifications of their clients. Nearly 85% of your customers are businessmen. Your firm is not the only business that makes the custom computers, but competes with many other firms that sale via retail channels as well as by mail-order and online. You differentiate your product from that of your competitors by offering 3 years of free onsite repair for any system you sell. You conduct a new study. The study results are:

    Weekly demand for computers is: Q = 1,000 - P
    Weekly cost of producing computers is: C(Q) = 2,000 + Q2
    Marginal Revenue (MR) = 1000 - 2Q
    Marginal Cost (MC) = 2Q

    - What is the market structure in which PC Warehouse operates?
    - How many PC's should you produce to maximize profits?
    -What price should you charge to maximize profits?
    - If you charge the profit maximizing price, what is your firm's profit or loss?
    - What do you think will happen to your profit or loss situation in the longer term?

    Your assistance is much appreciated!

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    Solution Summary

    Assess market structure.