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

Price Quantity Demanded

$100 0 novels

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 a constant $10 per book.

1. Compute total revenue, total cost, and profit at each quantity. What quantity would a profit-maximizing publisher choose? What price would it charge?
2. Compute marginal revenue. How does marginal revenue compare to the price? Explain.

Graph the marginal revenue, marginal cost and demand curves. At what quantity marginal revenue and marginal cost curves cross? What does this signify?