Posted by Anonymous on Tuesday, April 10, 2012 at 7:10am.
A firm that sells ebooks – books in digital form downloadable from the Internet – sells all ebooks relating to doityourself topics (home plumbing, gardening, and so on) at the same price. At present, the company can earn a maximum annual profit of $25,000 when it sells 10,000 copies within a year’s time. The firm incurs a 50cent expense each time a consumer downloads a copy, but the company must spend $100,000 per year developing new editions of the ebooks. The company has determined that it would earn zero economic profits if price were equal to average total cost, and in this case it could sell 20,000 copies. Under marginal cost pricing, it could sell 100,000 copies.
In the short run, what is the profitmaximizing price of ebooks relating to doityourself topics?
At the profitmaximizing quantity, what is the average total cost of producing ebooks?

economics  Anonymous, Friday, April 18, 2014 at 3:18pm
wut
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