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When Apple introduced its first portable media player, the iPod, its constant marginal cost of producing the top-of-the-line model was $200 (iSuppli), its fixed cost
When Apple introduced its first portable media player, the iPod, its constant marginal cost of producing the top-of-the-line model was $200 (iSuppli), its fixed cost was approximately $376 million, and we estimate that its inverse demand function was p = 600-25Q, where Q is units measured in millions. What was Apple's average cost function? What were its profit-maximizing price and quantity, profit, and Lerner Index? What was the elasticity if demand at the profit-maximizing solution in a figure. (Hint:See Q&A 9.2.)
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