A textbook publisher finds himself in monopolistic competition. This company cannot sell books at a price of $ 100 pesos per book. But for each decrease of $ 10 pesos that he makes in the price, the number of books he manages to sell increases by 20 daily books. The fixed cost of the company is $ 2,400 pesos per day. The average variable cost and the marginal cost of the company is constant at $ 20 pesos per book. If the business spends $ 1,200 a day on advertising, it can increase the number of books sold at each price by 50%. What is the price that maximizes the profits of the company when advertising is used? $ 60 $70 $50 $ 40

A textbook publisher finds himself in monopolistic competition. This company cannot sell books at a price of $ 100 pesos per book. But for each decrease of $ 10 pesos that he makes in the price, the number of books he manages to sell increases by 20 daily books. The fixed cost of the company is $ 2,400 pesos per day. The average variable cost and the marginal cost of the company is constant at $ 20 pesos per book. If the business spends $ 1,200 a day on advertising, it can increase the number of books sold at each price by 50%. What is the price that maximizes the profits of the company when advertising is used? $ 60 $70 $50 $ 40

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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