Question 3: Textbook

• Product: Textbook
• Selling price: $60
• Sales in January: 500
• Price elasticity: 5

The information above is provided by a bookstore. The store manager wants to determine if $50 is the profit maximization price for this textbook. He also provides the following information:

• Purchase price from publisher: $40

Question 3.1: Please create a linear demand curve based on the given information.

[Please type the equation of the linear demand curve]

Question 3.2: Use Excel Solver to find out the profit maximizing price of this textbook.