Viking Publishing House observed that in the recent years books on nature conservation and climate change have been very popular. As a matter of fact, Jane Goodall's latest book, "The Book of Hope: A Survival Guide for an Endangered Planet" has been a best-seller and Viking estimates the following demand curve for the book: P= 150 -Q In this equation, P is the price of the book and Q denotes yearly sales in thousands of books. In other words, 20,000 books would be expressed as Q= 20. Viking estimates that it incurs a cost of $40 for printing and shipping of each book and pays a $10 royalty to Jane Goodall for each book sold. a. Calculate the profit-maximizing OUTPUT and PRICE for this book. Also, calculate the TOTAL PROFITS. Show all calculations. No calculations, no points.
Viking Publishing House observed that in the recent years books on nature conservation and climate change have been very popular. As a matter of fact, Jane Goodall's latest book, "The Book of Hope: A Survival Guide for an Endangered Planet" has been a best-seller and Viking estimates the following demand curve for the book: P= 150 -Q In this equation, P is the price of the book and Q denotes yearly sales in thousands of books. In other words, 20,000 books would be expressed as Q= 20. Viking estimates that it incurs a cost of $40 for printing and shipping of each book and pays a $10 royalty to Jane Goodall for each book sold. a. Calculate the profit-maximizing OUTPUT and PRICE for this book. Also, calculate the TOTAL PROFITS. Show all calculations. No calculations, no points.
Chapter6: Elasticity
Section: Chapter Questions
Problem 12QP
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Transcribed Image Text:Viking Publishing House observed that in the recent years books on nature conservation and climate change
have been very popular. As a matter of fact, Jane Goodall's latest book, "The Book of Hope: A Survival Guide
for an Endangered Planet" has been a best-seller and Viking estimates the following demand curve for the
book:
P= 150 -Q
In this equation, P is the price of the book and Q denotes yearly sales in thousands of books. In other words,
20,000 books would be expressed as Q = 20.
Viking estimates that it incurs a cost of $40 for printing and shipping of each book and pays a $10 royalty to
Jane Goodall for each book sold.
Calculate the profit-maximizing OUTPUT and PRICE for this book. Also, calculate the TOTAL
а.
PROFITS. Show all calculations. No calculations, no points.
b.
Viking's CEO, Mr. Brian Tart, receives a yearly bonus from the company based on the size of the
total revenue generated by Jane Goodall's book. Mr. Tart believes that his bonus is going to be satisfactory
only if the marginal revenue from the book is $75.
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