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August 23, 2014

Homework Help: Microeconomics

Posted by G on Thursday, September 18, 2008 at 10:17am.

I am on the chapter for monoplies.

I need to calculate the total cost for the following question. I am not quite clear if I am to use the $2 million that was paid to author to write the book to calculate the total cost, since the question is stating that the marginal cost has been a constant $10 per book?

Question:

A publisher faces the following demand schedule for the next novel of one of its popular authors:

Price Quantity Demanded

$100-----------0
$90---------100,000
$80---------200,000
%70---------300,000
$60---------400,000
$50---------500,000
$40---------600,000
$30---------700,000
$20---------800,000
$10---------900,000
$0--------1,000,000

The author is paid $2 million to wirte the book, and the marginal cost of publishing the book is a constant $10 per book

Compute total revenue, total cost, and profit at each quantity.

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