A start-up computer company is in the process of introducing their first line of computers. These computers are high in performance and "radically slim" in design but will cost the company only $1,000 to produce and ship each unit. The machines are sold to retailers for $1,500.

After first year sales were projected to be a mere 15,000, the company decided to cut the manufacturer's selling price by $300 per computer.

In addition to manufacturing the computers, the company has invested heavily in marketing the computer. They spend approximately $8,000,000 on marketing the first line computer.