Computation of quantity and profit

Assignment Help Macroeconomics

Reference no: EM1315730

Below is demand and cost information for Warm fuzzy press, which holds the copyright on the new best-seller, Burping Your Inner Child.

Q (No. of Copies)	P (per book)	ATC( per book)
100,000	$100	$20
200,000	$80	$15
300,000	$60	$16 and 2/5
400,000	$40	$22 and ½
500,000	$20	$31

a. Determine what quantity of the book Warm fuzzy should print, and what price it should charge in order to maximize profit.

b. What is Warmfuzzy's maximizing profit?

c. Prior to publication, the book's author renegotiates his contract with Warm fuzzy. He will receive a great big hug from the CEO, along with a one-time bonus of $1,000,000, payable when the book is published. The payment was not part of Warmfuzzy's original cost calculations. How many copies should Warm fuzzy publish now? Explain your reasoning.

Reference no: EM1315730

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