Suppose the publisher was not profit maximizing but was concerned with maximizing economic efficiency. If the author was paid €3 million instead of €2 million to write the book, how would this affect the publisher’s decision regarding the price to charge? Explain.į. In your graph, shade in the deadweight loss. at what quantity do the marginal revenue and marginal cost curves cross? What does this signify?ĭ. Graph the marginal revenue, marginal cost and demand curves. (recall that MR 5 DTR/DQ.) How does marginal revenue compare to the price? Explain.Ĭ. What quantity would a profit-maximizing publisher choose? What price would it charge?ī. Compute total revenue, total cost and profit at each quantity. A publisher faces the following demand schedule for the next novel from one of its popular authors: The author is paid 2 million to write the novel, and the marginal cost of publishing the novel is a constant 10 per copy. The author is paid €2 million to write the book, and the marginal cost of publishing the book is a constant €10 per book.Ī. The best-known types are copyrights, patents, trademarks, and trade secrets.The modern concept of intellectual property developed in England in the 17th and 18th centuries. There are many types of intellectual property, and some countries recognize more than others. A publisher faces the following demand schedule for the next novel of one of its popular authors: Intellectual property (IP) is a category of property that includes intangible creations of the human intellect.
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