4. The Central Publishing Company is about to publish its first reference book in

managerial economics. It is now in the process of estimating costs. It expects to produce 10,000

copies during its first year. The following costs have been estimated to correspond to the

expected copies.

a. Paper Stock $8,000

b. Typesetting $15,000

c. Printing $50,000

d. Art (including graphs) $9,000

e. Editing $20,000

f. Reviews $3,000

g. Promotion and advertising $12,000

h. Binding $22,000

i. Shipping $10,000

In addition to the preceding costs, it expects to pay the authors a 13 percent royalty and its

salespeople a 3 percent commission. These percentages will be based on the publisher's price

of $48 per book. Some of the preceding costs are fixed and others are variable. The average

variable costs are expected to be constant. Although 10,000 copies is the projected volume, the

book could sell anywhere between 0 and 20,000 copies.

Using the preceding data,

1. Write equations for total cost, average total cost, average variable cost, and marginal

cost.

2. Draw the cost curves for quantities from 0 to 20,000 (in intervals of 2,000).