A publisher faces the following demand schedule for the next novel from one of its popular authors:

Price ($) Quantity

100 0

90 100,000

80 200,000

70 300,000

60 400,000

50 500,000

40 600,000

30 700,000

20 800,000

10 900,000

0 1,000,000

The author is paid $2 million to write the book and the marginal cost of publishing the book is $10 per book.

a) Compute the total revenue, total cost, and profit at each quantity. What would be the profit-maximizing price, and what would be the quantity that will be sold in the market? (points 10)

b) Compute the Marginal Revenue and the Marginal Cost for each unit. Use the Golden rule of profit maximization; does it give you the same conclusion as the total profit method for this scenario? (points 5)

c) Suppose the publisher faced perfect competition, and the author's book is not that "novel," what would be the price charged by the publisher in this case? How did you arrive at your conclusion? (points 5)