Question

2. A publisher brings a new book on the market. The demand for the book is q 1000 20p where q denotes the quantity and p the price of the book. The publisher has to pay an initial cost of 200$ to be able to print the book, and the printing of each book costs 1$. (a) What is the total revenue of the publisher depending on the number of books sold? (b) What is the total cost of the publisher depending on the number of books sold? (e) What does the marginal revenue measure? Calculate the marginal revenue for 1,2,3 and 4 books produced (d) Which two effects result in monopolist's marginal revenue being smaller than the demand? Which of the two effects is absent under perfect competition and why?

Answer 1

in q = 1000 - 200 20 p 1000 - 9 Lent 2 p a 50-lq s) via ew P 50 - 0.059. : Total Revenue & pxq 509 -0.0593 noun

Initial cost : $2008 cost each book = $ 1 o Tatal costa $200 & $1xq. 6. Marginal New MR Revenue (MB) = ATR en een bond q si lienee = 50 - 0.19 for 1 book = 49.9 (50-0.1) 2 - 49.8 (50-0-2) 3 1 49.7 (50-0.3) 4 , 49.6 (50 -0.4)

Чаginаl е лоци Сено и со below the demand curve because :- (1) Monopolist has to lower the price in conder to increas his soles. (2) Demand curne represent marginal social benefit and marginal re nenu curne represent marginal brinali bnefit. I Now, marginal social benefit> marginal prinat benefit P op a monopoly In perfect competition - demand curne coincides the marginal revenue curve. This is because the firms are price takers a with no marker control and faces perfectly elastic demand curve where - in Imone poly demand carne is relatively inelastic! I