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Q3. (10 points) Suppose you are a print house manager for newspapers. Your cost is 20 cents per newspaper, and you charge the retailer 80
Q3. (10 points) Suppose you are a print house manager for newspapers. Your cost is 20 cents per newspaper, and you charge the retailer 80 cents per newspaper. The retailer sells to customers at $1 per newspaper. Any unsold newspaper is returned to you for full refund of the wholesale price. Demand for newspapers is uniformly distributed between 40 and 60 . a. How many newspapers should you print? (2 points) b. The retailer would like to "induce" you to print more newspapers. Therefore, the retailer agrees to "pay-back" unsold newspapers at price \$2 cents per newspaper. How many newspapers will you print? (3 points) c. What pay-back price should the retailer offer to induce you to print the quantity that maximizes the combined profit of you and the retailer? (5 points)
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