Question

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?

Answer 1

A monopolist decides what price to charge based on the demand curve it faces. It sets the price where demand equals marginal revenue (MR) to maximize profits.

Step-by-step explanation:

When a monopolist identifies its profit-maximizing quantity of output, it decides what price to charge based on the demand curve it faces. The monopolist sets the price at a point where demand equals marginal revenue (MR) to maximize its profits. To find the price, the monopolist locates the quantity of output on the demand curve for which the MR curve equals marginal cost (MC). The corresponding price on the demand curve is the price the monopolist would charge.

For example, let's say the monopolist determines that in order to maximize profit, it should produce 100 units of output. The corresponding price on the demand curve at this quantity is $10. Therefore, the monopolist would charge $10 per unit of output.

To calculate the profit, subtract the total cost of producing 100 units from the total revenue generated by selling the 100 units at $10 each. If the total cost is $800 and the total revenue is $1000, the profit would be $200 at this price.