A publisher has the following table of demand for the next novel by one of its famous authors:

Number of Novel

Price in Demand

100 0

90 1

80 2

70 3

60 4

50 5

40 6

30 7

20 8

10 9

0 10

The author is paid $2 to write the book (Fixed Cost or FC) and the marginal cost (MC) of publishing it is a constant $10 per book.

a) Calculate the total revenue, total cost, and corresponding profits for each quantity. What quantity would a profit-maximizing publisher choose? What price would he set?

b) Calculate marginal revenue. How does marginal revenue compare to price? Explain.

c) Plot the marginal revenue (MR), marginal cost (MC), and demand (D) curves. At what quantity do the marginal revenue and marginal cost curves intersect? What does this mean?

d) Obtain the economic profits (EP) of this monopolist and graph.