Question
Lucinda has written a new novel and has chosen to self-publish.Her copyright ensures that no one can legally copy her novel. Thetable below shows the
Lucinda has written a new novel and has chosen to self-publish.Her copyright ensures that no one can legally copy her novel. Thetable below shows the demand for Lucinda's novel and her costs ofpublishing.
| Lucinda's Demand and Costs of Publishing | ||||
Price (dollars) |
Quantity (books) | Marginal Revenue (dollars) | Marginal Cost (dollars) | Average Total Cost (dollars) |
| $45 | 0 | ? | ? | ? |
| 40 | 4,000 | $40 | $5.00 | $6.25 |
| 35 | 8,000 | 30 | 3.75 | 5.00 |
| 30 | 12,000 | 20 | 5.00 | 5.00 |
| 25 | 16,000 | 10 | 10.00 | 6.25 |
| 20 | 20,000 | 0 | 18.75 | 8.75 |
| 15 | 24,000 | ?10 | 31.25 | 12.50 |
a. How many books should Lucinda publish in order to maximizeprofits?
_______ books
b. What price should Lucinda charge for her books in order tomaximize profits?
$ _______ per book
c. How much profit will Lucinda?s books generate if she producesthe profit-maximizing quantity and charges the profit-maximizingprice?
$ ________
d. Identify the profit maximizing price and quantity, and thenshow the amount of profit earned.
Price (dollars per book) 50 45 40 Market for Lucinda's Books 35 MC 30 22 15 10 D ATC 5 0 -5 MR -10 0 4000 8000 12000 18000 20000 24000 28000 Quantity (books) reset Profit Max Profit
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Price theory and applications
Authors: Steven E landsburg
8th edition
538746459, 1133008321, 780538746458, 9781133008323, 978-0538746458
