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Consider the problem of setting a price for a book. The marginal cost of production is constant at $

Consider the problem of setting a price for a book. The marginal cost of production is constant at $20 per book. The publisher knows from experience that the slope of the demand curve is minus−$0.20per textbook: Starting with a price of $44, a price cut of $0.20 will increase the quantity demanded by one textbook, or for every dollar the price falls, five more textbooks are purchased. For example, here are some combinations of price and quantity: a. The publisher will choose the profit-maximizing price of $nothing. (Choose the price that comes closest to maximizing profit from the table above.) Price per textbook:$44$40$36$32$30  Quantity of textbooks:80100120140150

 

Apr 27 2020 View more View Less

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