1.) A firm that sells e-books - books in digital form downloadable from the Internet - sells all e-books relating to do-it-yourself topics (home plumbing, gardening, and so on) at the same price. At present, the company can earn a maximum annual profit of $20,000 when it sells 25,000 copies within a yearâs time. The firm incurs a 30-cent expense each time a consumer downloads a copy, but the company must spend $145,000 per year developing new editions of the e-books. The company has determined that it would earn zero economic profits if price were equal to average total cost, and in this case it could sell 25,000 copies. Under marginal cost pricing, it could sell 105,000 copies.
A.) In the short run, what is the profit-maximizing price of e-books relating to do-it-yourself topics? $___
B.) At the profit-maximizing quantity, what is the average total cost of producing e-books? $___
2.) The table below gives price and cost information for a used-book. It competes with a number of similar stores, but it capitalizes on its location and the word-of-mouth reputation of the coffee it serves to its customers.
Calculate average total cost for the bookstore (Round your answer to the nearest penny.)
Q
Book Price ($)
MR
($)
Total Costs
($)
Average Total Cost
($)
MC
($)
0
5.50
-
2.00
-
-
1
5.25
5.25
4.75
2.75
2
5.00
4.75
7.75
3.00
3
4.75
4.25
11.00
3.25
4
4.50
3.75
14.75
3.75
5
4.25
3.25
19.00
4.25
6
4.00
2.75
23.75
4.75
7
3.75
2.25
29.50
5.75
How I calculate both problems?
1.) A firm that sells e-books - books in digital form downloadable from the Internet - sells all e-books relating to do-it-yourself topics (home plumbing, gardening, and so on) at the same price. At present, the company can earn a maximum annual profit of $20,000 when it sells 25,000 copies within a yearâs time. The firm incurs a 30-cent expense each time a consumer downloads a copy, but the company must spend $145,000 per year developing new editions of the e-books. The company has determined that it would earn zero economic profits if price were equal to average total cost, and in this case it could sell 25,000 copies. Under marginal cost pricing, it could sell 105,000 copies.
A.) In the short run, what is the profit-maximizing price of e-books relating to do-it-yourself topics? $___
B.) At the profit-maximizing quantity, what is the average total cost of producing e-books? $___
2.) The table below gives price and cost information for a used-book. It competes with a number of similar stores, but it capitalizes on its location and the word-of-mouth reputation of the coffee it serves to its customers.
Calculate average total cost for the bookstore (Round your answer to the nearest penny.)
| Q | Book Price ($) | MR ($) | Total Costs ($) | Average Total Cost ($) | MC ($) |
| 0 | 5.50 | - | 2.00 | - | - |
| 1 | 5.25 | 5.25 | 4.75 | 2.75 | |
| 2 | 5.00 | 4.75 | 7.75 | 3.00 | |
| 3 | 4.75 | 4.25 | 11.00 | 3.25 | |
| 4 | 4.50 | 3.75 | 14.75 | 3.75 | |
| 5 | 4.25 | 3.25 | 19.00 | 4.25 | |
| 6 | 4.00 | 2.75 | 23.75 | 4.75 | |
| 7 | 3.75 | 2.25 | 29.50 | 5.75 |
How I calculate both problems?
