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?

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?

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?