What is the average total cost of producing e-books

Assignment Help Econometrics

Reference no: EM13224616

A firm that sells e-books(books in digital form downloadable from the Internet) sells all e-books relating to do-it-yourself topics such as home plumbing,gardening and the like at the same price. At present, the company can earn a maximum annual profit of $25,000 when it sells 10,000 copies within a year's time. The firm incurs a 50-cent expense each time a consumer downloads a copy, but the company must spend $100,000 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 20,000 copies. Under marginal cost pricing (p=MC), it could sell 100,000 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?

Reference no: EM13224616

Questions Cloud

Develop essay that explores at least two different approach : Discuss the differences of the two approaches. Finally, discuss the conditions or contexts of when it would be appropriate to use each approach.

Explain what is the nature of cross subsidy : price levels in local service and long distance were in the past greatly influenced by cross subsidy. What is the nature of cross subsidy, its extent, and its consequences for the pricing of new long distance entrants in comparison to AT&T

Hospitals that are excluded from the medicare acute pps : Hospitals that are excluded from the Medicare acute PPS (such as children's hospitals) are paid based on

About stockholders : Which of the following is true about stockholders?

What is the average total cost of producing e-books : At present, the company can earn a maximum annual profit of $25,000 when it sells 10,000 copies within a year's time. The firm incurs a 50-cent expense each time a consumer downloads a copy, but the company must spend $100,000 per year.

What role does corporate-level strategy play : What role does corporate-level strategy play in relation to business-level strategy and what roles do a firm's core competencies play in a decision to diversify into new businesses?

Explain nitrogen in a molecule of nitrogen dioxide : What is the redox number for nitrogen in a molecule of nitrogen dioxide

Who are the advertisements targeted towards : Who are the advertisements targeted towards? What assumptions do the advertisements make about the target audience/consumers of the video game?

Exhibits the smallest rise in temperature : In response to the same input of heat, which one of the following substances exhibits the smallest rise in temperature?

User Account

All Pages