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Original equipment manufactures (OEMs) of personal computers combine hardware with the Windows operating system. Assume they are competitive, the cost per PC of hardware c
Original equipment manufactures (OEMs) of personal computers combine hardware with the Windows operating system. Assume they are competitive, the cost per PC of hardware c = 1 and the license fee paid to Microsoft to install Windows on a PC is t. Let r = 3 equal the revenue spent on other software products made by Microsoft by every consumer that purchases a PC. Let the demand curve for PC's be given by p = 10 - q. The marginal cost of producing software (Windows and other programs) is close to zero that assuming it is zero is sensible.+ (a) What is the profit-maximizing license fee for Microsoft? + (b) At this price what are its profits (Here you do not need to consider the costs of development)? - (c) What is the socially efficient license fee? Why? + (d) What is the DWL associated with Microsoft's licensing of Windows? Why is this inefficient? + (e) What are its profits if the costs of development for Windows and its other software products are f? For what values of f does Microsoft make positive profits? + (f) If f = 36, is the pricing of Windows necessary inefficient? Explain.+ OIn the demand curve, p is the bundle price for hardware, Windows operating systems and other software products made by Microsoft.+ 2 Quantity (q) does not need to be an integer.+
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