An author receives a royalty based on 1/2 of the revenue generated by the sale of her book.1 Assume that the book's inverse demand is given by: P = 100 - Q. It costs the publisher $10 to produce an additional copy of the book.

a. Given the royalty plan, discuss the conflict that this arrangement creates between the author and the publisher about the amount to produce. Ignore issues related with the promotion of the book in your answer. Concentrate on pricing decisions. Include a well-written explanation that summarizes the effects of the royalty on market outcomes. Your explanation should read like a textbook. All illustrations should be hand-drawn. Include an illustration. The numbers associated with profit maximization are not important here.