Guy Rope and his backing group, the Tent Pegs, have just finished recording their latest music CD. Their record company's marketing department determines that the demand for the CD is as follows: Price (€) Number of CDs €24 10 000 22 20 000 20 30 000 18 40 000 16 50 000 14 60 000 The company can produce the CD with no fixed cost and a variable cost of €0.15 per CD. a. Find total revenue for quantity equal to 10 000, 20 000 and so on. What is the marginal revenue for each 10 000 increase in the quantity sold? b. What quantity of CDs would maximize profit? What would the price be? What would the profit be? c. If you were Guy Rope's agent, what recording fee would you advise Guy to demand from the record company? Why?

Guy Rope and his backing group, the Tent Pegs, have just finished recording their latest music CD. Their record company's marketing department determines that the demand for the CD is as follows: Price (€) Number of CDs €24 10 000 22 20 000 20 30 000 18 40 000 16 50 000 14 60 000 The company can produce the CD with no fixed cost and a variable cost of €0.15 per CD. a. Find total revenue for quantity equal to 10 000, 20 000 and so on. What is the marginal revenue for each 10 000 increase in the quantity sold? b. What quantity of CDs would maximize profit? What would the price be? What would the profit be? c. If you were Guy Rope's agent, what recording fee would you advise Guy to demand from the record company? Why?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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