Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A firm that sells e-books - books in digital form downloadable from the Internet - sells all e-books relating to do-it-yourself topics (home plumbing, gardening,
A firm that sells e-books - books in digital form downloadable from the Internet - sells all e-books relating to do-it-yourself topics (home plumbing, gardening, and so on) at the same price. At present, the company can earn a maximum annual profit of $20 comma 00020,000 when it sells 10 comma 00010,000 copies within a year's time. The firm incurs a 3030-cent expense each time a consumer downloads a copy, but the company must spend $145 comma 000145,000 per year developing new editions of the e-books. The company has determined that it would earn zero economic profits if price were equal to average total cost, and in this case it could sell 30 comma 00030,000 copies. Under marginal cost pricing, it could sell 110 comma 000110,000 copies. Part 2 In the short run, to the nearest cent, what is the profit-maximizing price of e-books relating to do-it-yourself topics? $enter your response here
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started