b. To maximize profits, the newspaper will set marginal revenue equal to margina

Question

b. To maximize profits, the newspaper will set marginal revenue equal to marginal cost. Solve for the profit maximizing price. When the newspaper charges this price, the difference between the price and the marginal cost of printing and delivering each newspaper is …

c. If the newspaper charges the profit-maximizing price and prints 100 column inches, how many copies would it sell (round to the nearest integer)? Write a general expression for the number of copies sold as a function of S: Q(S)=

d. Assuming that the paper charges the profit-maximizing price, write an expression for profits as a function of Q and S. Using the solution for Q(S) that you found in the last section, substitute Q(S) for Q to write an expression for profits as a function of S alone

e. If the newspaper charges its profit-maximizing price, and prints the profit-maximizing amount of scandal, how many column inches should it print? How many copies are sold and what is the amount of profit for the newspaper?

Explanation / Answer

(a) The formula of price elasticity of demand is percentage chamge in quantity demanded by percentage change in price of the commodity.

yes, the elasticity of depend on the column reported.

There are 5 degrees to measure elasticity of demand

1. Perfectly elastic.

2. perfectly Inelastic .

3. unitary.

4.Less than unitary

5 more than unitary

Perfectly elastic occurs when a little change in the price leads to the infinite demand of the quantity.

So if we take the case of olden time when newspapers were only the source of gaining information whats happening around. At one point it could be Inelastic depending on number of its users.

(b) Profit maximisation occurs when MC=MR

accurate price is not being determined but to calculate the TC(total cost) -MC(marginal cost)

0.10Q is the total cost.

(c) P(S)

(d) Profit is obtained as follows

Selling price- cost price.

(e) If the newspaper charges its profit maximisation price and prints the Profit maximizing amount of scandal. It would earn some percentage of amount depending on the column printed by them.

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