Question
Afirmthatsellse-booksbooksindigitalformdownloadablefromtheInternetsellsalle-booksrelatingtodo-it-yourselftopics(homeplumbing,gardening,andthelike)atthesameprice.Atpresent,thecompanycanearnamaximumannualprofitof$25,000whenitsells10,000copieswithinayear'stime.Thefirmincursa50centexpenseeachtimeaconsumerdownloadsacopy,butthecompanymustspend$100,000peryeardevelopingneweditionsofthee-books.Thecompanyhasdeterminedthatitwouldearnzeroeconomicprofitsifpricewereequaltoaveragetotalcost,andinthiscaseitcouldsell20,000copies.Undermarginalcostpricing,itcouldsell100,000copies
Afirmthatsellse-booksbooksindigitalformdownloadablefromtheInternetsellsalle-booksrelatingtodo-it-yourselftopics(homeplumbing,gardening,andthelike)atthesameprice.Atpresent,thecompanycanearnamaximumannualprofitof$25,000whenitsells10,000copieswithinayear'stime.Thefirmincursa50centexpenseeachtimeaconsumerdownloadsacopy,butthecompanymustspend$100,000peryeardevelopingneweditionsofthee-books.Thecompanyhasdeterminedthatitwouldearnzeroeconomicprofitsifpricewereequaltoaveragetotalcost,andinthiscaseitcouldsell20,000copies.Undermarginalcostpricing,itcouldsell100,000copies
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