Professor Simpson writes a book. The demand for the book is P=20-Q. The fixed co
ID: 1098116 • Letter: P
Question
Professor Simpson writes a book. The demand for the book is P=20-Q. The fixed cost to produce the book is $10. Professor Simpson wants to sell the book as an ebook, downloadable from his website. Marginal cost in this case would be zero and it costs him nothing to run his website. He wants to give students the possibility of letting them pay whatever amount they want for the ebook. Suppose all students will pay their maximum willingness to pay. How much profit professor Stoian will make?
Answer
$190
$390
$200
$400
$0
$190
$390
$200
$400
$0
Explanation / Answer
As there is max willing ness to pay
hence amount that can be paid is integral of (P*Q)
=integral((20-Q)*Q)
=20Q-Q^2/2
maxmising this we get by differentiating and equating to zero
=> 20-Q =0
=> Q=20
so profit he makes = 20Q-Q^2/2-Fixed cost
=(20*20- (20)^2/2 )-10
=$190
ans:a) $190
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