5. The Wise Economists, a top rock band, have just finished recording their latest music CD. Their record company’s marketing department determines that the demand for the CD is as follows:

The company can produce the CD with no fixed cost and a variable cost of €5 per CD:

a. Find total revenue for quantity equal to 10 000, 20 000 and so on. What is the marginal revenue for each 10 000 increase in the quantity sold?

b. What quantity of CDs would maximize profit? What would the price be? What would the profit be?

c. If you were The Wise Economists agent, what recording fee would you advise them to demand from the record company? Why?

Transcribed Image Text:

Price () 24 22 22 Number of CDs 10000 20 000 20 30 000 18 40 000 16 50 000 14 60 000