(Solved):   Question 1 A publisher faces the following demand schedule for the next novel of one of it ...

 

Question 1 A publisher faces the following demand schedule for the next novel of one of its popular authors: The author is paid \( \$ 2 \) million to write the book, and the marginal cost of publishing the book is a constant \( \$ 10 \) per book. (a) Compute total revenue (TR), total cost (TC) and profit at each quantity level. What quantity would profit-maximizing publisher choose? What price would it charge? (b) Compute marginal revenue (MR). How does MR compare to the price? Explain. (c) Graph the MR, MC, and demand curve. At what quantity do MR and MC curves cross? What does it signify? (d) In your graph, share in the deadweight loss (DWL). Explain in words what this means. (e) If the author were paid \( \$ 3 \) million instead of \( \$ 2 \) million to write the book, how would this affect the publisher's decision regarding the price to charge? Explain. (f) Suppose the publisher was not profit-maximizing but was concerned with maximizing economic efficiency. What price would it charge for the book? How much profit would it make at this price?