1. A group of five students has decided to form a company to publish a guide to eating establishments located in the vicinity of all major college and university campuses in Edinburgh. In planning for an initial publication of 6,000 copies, they estimated the cost of producing this book as follows: Item Cost (9) Paper 12,000 Research 2,000 Graphics 5,000 Reproduction services 8,000 Miscellaneous 5,000 Personal computer 2,000 Desktop publishing software 500 Overhead 5,500 Binding 3,000 Shipping 2,000 By engaging in the business, the students realized that they would have to give up their summer jobs. Each student made an average of $4,000 per summer. However, they believed they could keep expenses down by doing much of the research for the book by themselves with no immediate compensation. They decided to set the retail price of the book at $12.50 per copy. Allowing for the 20 percent discount that retail stores in the campuses generally required, the students anticipated a per-unit revenue of about $10.00. The director of the campus bookstore advised them that their retail price was too high, and that a price of $9 would be more reasonable for a publication of this kind. One of the students, an economics major, asked the bookstore manager to provide her with historical data on sales and prices of similar books. From these data she estimated the demand for books of this kind to be Q = 18,500 - 1,000 P where Q = number of books sold per year and P = retail price of the books. a. Construct a numerical table for the retail demand curve, and plot the numbers on a graph. Calculate the elasticity of demand for the interval between $12.50 and $8.00. b. Assuming the student's demand equation is accurate; offer a possible reason why the bookstore manager would want to sell the book at the lower price of E9. c. Do you think the students should follow the store manager's advice and price their book at $9? Explain. If you do not agree with this price, what would be the optimal price of the book? Explain. d. Assuming the students decide to charge their optimal price, do you think they should proceed with this venture? If not, explain what adjustments could be made to their business plan to make it viable