Posted by **tinky** on Saturday, October 14, 2006 at 8:55am.

Thank you so much economyst but i do'nt understand the ans for part (b)

The demand function for a well known economics textbook is:

P = 100 - .005Q

The publisher must pay $20 per book in printing and distribution costs and, in

addition, it must pay the author a $20 royalty for each book sold.

(b) A consultant says that the publisher and the author have the wrong type of

agreement. He says that the author and the publisher should tear up their

original agreement, in which the author gets $20 per book sold, and enter

into a profit-sharing agreement. He recommends that the author gets 40%

of the profit and the publisher 60%. What price should the publisher set

with this profit-sharing agreement?

MC=20+0.4*profit

why is profit (P-20)

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