CUPERTINO, Calif. (Reuters) - Apple Computer Inc. AAPL.O introduced on Monday a mid-range computer for its crucial but hard-hit education market, where the iconic personal computer maker faces increasing competition.

The eMac is based on the previous-generation iMac computer, bundling the guts of a computer in a housing built around a cathode-ray-tube monitor, Apple said in a statement.

The eMac has a 17-inch monitor instead of the 15-inch iMac screen and a G4 processor, Apple's top of the line, and will be priced at about $1,000 to $1,200.

The eMac fills a price performance gap between the redesigned iMac with a flat panel monitor, a G4 chip, and a price tag beginning at $1,400, and the older generation of colorful, cathode-ray-tube iMacs based on the G3 processor, which cost $800-$1,000.

Apple has said that education budgets are shrinking along with tax receipts in the U.S. economy, while it is also fighting off incursions into the education market by Dell Computer Corp. DELL.O and other PC vendors.

Shares of Apple closed up 95 cents, or 4.1 percent, at $23.96 on the Nasdaq, outpacing gains by other computer hardware makers.