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Monopoly: A publisher faces the given demand schedule for the next novel by one of its popular authors:


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

Q1. find out total revenue, marginal revenue, total cost and profit at each quantity. What quantity would a profit-maximizing publisher select? Determine at what price it would charge?

Q2. Draw the demand, marginal revenue and the marginal cost curves for the publisher. Show the profit-maximizing level of output and price.

Q3. Shade the deadweight loss caused by the monopoly pricing and output and describes in words what it means.

Q4. Assume that the publisher was not interested in profit maximizing however was concerned with maximizing economic welfare (that is, finding out price and output as if the market was a competitive market). What price would the publisher charge and how much gain would the publisher make?

Managerial Economics, Economics

  • Category:- Managerial Economics
  • Reference No.:- M910109

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