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Q.3: Textbook publishers hope to maximize profits. Authors, on the other hand, have different incentives since they are paid royalties. Assume that an author's contract
Q.3: Textbook publishers hope to maximize profits. Authors, on the other hand, have different incentives since they are paid royalties. Assume that an author's contract specifies royalties of 20% of the revenue from the sale of the text. Thus, if the publisher's revenue is $100,000, the author's royalties will be $20,000.Who will prefer a higher price for the text, the publisher or the author?Explain in detail. (Hint: Assume a linear demand for the text and use the elasticity concept)
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