1 A publisher faces the fol lowing demand schedule for the next novel from one of its popular authors:

The author is paid $2 million to write the book, and the marginal cost of pub lishing the book is a constant $1 0 per book.
a Compute total revenue, total cost and profit at each quantity. What quantity would a profit-maximising publisher choose? What price would it charge?
b Compute marginal revenue. (Recall that MR = t::,,TR/!:::,,Q.) How does marginal revenue compare to the price? Explain.
c Graph the marginal-revenue, marginal-cost and demand curves. At what quantity do the marginal-revenue and marginal-cost curves cross? What does this signify?
d In your graph, shade in the deadweight loss. Explain in words what this means.
e If the author were paid $3 million instead of $2 million to write the book, how would this affect the publisher's decision regarding what price to charge? Explain.
f Suppose the publisher was not profit-maximising but was concerned with maximising economic efficiency. What price would it charge for the book? How much profit would it make at this price?