Pinesboro Herald is the only local newspaper in the city of Pinesboro. The publisher faces the demand schedule shown in the first table above and has the cost schedule shown in the second table above.
a) Calculate the marginal revenue schedule. In the figure, draw the demand curve and the marginal revenue curve.
b) Calculate the publisher’s marginal cost and average total cost schedule. In the same figure that you drew the demand and marginal revenue curves, draw the marginal and the average total cost curves.
c) What are the publisher’s profit maximizing output and price? What is the publisher’s economic profit per day?
d) At the price charge, is the demand for the newspapers elastic or inelastic? Explain your answer.
e) Does the publisher use resource efficiently? What is the deadweight loss? Explain your answer.
f) Will the publisher try to price discriminate? Why or why not?