You are the manager of College Computers, a manufacturer of customized computers that meet the specifications required by the local university. Over 90 percent of your clientele consists of college students. College Computers is not the only firm that builds computers to meet this university’s specifications; indeed, it competes with many manufacturers online and through traditional retail outlets. To attract its large student clientele, College Computers runs a weekly ad in the student paper advertising its “free service after the sale” policy in an attempt to differentiate itself from the competition. The weekly demand for computers produced by College Computers is given by Q = 1,400 − 4P, and its weekly cost of producing computers is C(Q) = 1,200 + 2Q2. If other firms in the industry sell PCs at $300, what quantity and price of computers should you produce to maximize your firm’s profits?

Instructions: Round your response to the nearest whole number.

Quantity: computers

Instructions: Round your response to the nearest penny (two decimal places).

Price: $

What long-run adjustments should you anticipate?

multiple choice
Entry by other firms along with increased profits.
Exit by other firms along with decreased profits.
Entry by other firms, reducing your profits.
Exit by other firms, increasing your profits.