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

Qd

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Price

100

90

80

70

60

50

40

30

20

10

0

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

a. Compute total revenue, total cost, and profit at each quantity. What quantity would a profit-maximizing publisher choose? What price would it charge?

b. Compute marginal revenue. (Recall that MR 5 TR/Q.) How does marginal revenue compare to the price? Explain.