11 Question (12 points) e See page 463 Facts Over Fiction (FOF) is a news website that is committed to publishing only facts and never any fake news. Because this is a relatively uncommon business model these days, FOF has a monopoly on this kind of reporting. The demand for FOF's reporting is given by Q = 25000M2 P-3, where Q is the number of day passes to the FOF website purchased by readers, M is the number of megabytes devoted to facts on the website, and P is the price of a day pass. Facts are not in short supply, but they are costly to collect, sort, and distribute. The cost of reporting M megabytes of facts is $10M. These costs are independent of other costs of running the website. In addition to the costs of gathering facts, there are also costs of hosting and transmitting website data. These costs amount to $2 per day pass purchased. This publishing cost is independent of the cost of gathering facts. Therefore, FOF's total cost of delivering a day pass of facts is $10M + $2Q. 1st attempt Part 1 (3 points) See Hint Calculate the price elasticity of demand for one Facts Over Fiction website day pass (remember the price elasticity is typically a negative number). Does price elasticity depend on the number of facts reported? Is price elasticity constant over all prices?

Part 2 (2 points) See Hint Remember that MR P(1 + ). To maximize profits, Facts Over Fiction will set marginal revenue equal to marginal cost. Solve for the profit-maximizing price for FOF to charge per day pass. $ When FOF charges this price, the difference between the price and the marginal cost of providing a day pass is $ Part 3 (2 points) See Hint If Facts Over Fiction charges the profit-maximizing price and collects and distributes 200 megabytes of facts, how many day passes would FOF sell? (Round your answer to the nearest integer.) Now suppose we don't know how many megabytes of facts FOF will distribute. Which of the following expressions gives a general expression for the number of day passes sold as a function of M? Choose one: O A. Q = 337.50M O B. Q = 75000M C. Q = 25000M2 OD.Q = 925.93M

Part 4 (2 points) See Hint Facts Over Fiction's profit depends on both the number of day passes it sells and on the number of megabytes of facts that it gathers. Which of the following equations gives FOF's profit as a function of both Q and M? Choose one: O A. a = 3Q - 10M - 2Q B. n = - 3Q - 10M C. a = 3Q - 10M + 2Q O D.1 = 3Q - 10Q - 2M After substituting your answer to Part 3 (which gives the number of day passes as a function of the number of megabytes of facts), you will have a function that describes FOF's profit as a function only of M. What will that function be? Choose one: A. n = 925.93M L - 10M O B. T = 25000M 10M O C. 1 = 25000M - M2 O D T = 925.93 M 2 - 10M - 2M2

Part 5 (3 points) See Hint In this question you should use the rounded answer at each stage in calculating your answer to the next part. If FOF charges the profit-maximizing price and gathers the profit-maximizing amount of facts, how many megabytes of facts should it collect? (Round your answer to the nearest integer.) How many day passes will it sell? (Round your answer to the nearest integer.) And how much profit will FOF earn? (Round your answer to the nearest dollar.)