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QUESTION

Suppose Microsoft chooses to produce 80 million copies of the software per year and sells copies of the software to retailers at $199 per copy.

Suppose Microsoft chooses to produce 80 million copies of the software per year and sells copies of the software to retailers at $199 per copy. Now consider the problem of a retailer like Circuit City or Best Buy. Such retailers can sell as many copies of Vista they like at the prevailing market price of $200.

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