Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![3. Problems and Applications Q3
Johnny Rockabilly has just finished recording his latest CD. The company can produce the CD with no fixed cost and a variable cost of $7 per CD. His
record company's marketing department determines that the demand for the CD is as follows:
Complete the following table by computing total revenue for each quantity listed and marginal revenue for each 1,000 increase in the quantity sold.
Marginal Revenue
(Dollars)
Price
Total Revenue
(Dollars) Number of CDs (Dollars)
25
12,000
24
13,000
23
14,000
22
15,000
21
16,000
20
17,000
Profit is maximized at a quantity of
CDs and a price of
This results in a profit of S
If you were Johnny's agent, you would advise Johnny to demand a recording fee of
from the record company.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3c858a7b-3077-4b5c-80d0-495bf5b21518%2F4f0f9c12-d496-44dd-9c81-2ae0f65e04f1%2F4zn3jx_processed.gif&w=3840&q=75)
Transcribed Image Text:3. Problems and Applications Q3
Johnny Rockabilly has just finished recording his latest CD. The company can produce the CD with no fixed cost and a variable cost of $7 per CD. His
record company's marketing department determines that the demand for the CD is as follows:
Complete the following table by computing total revenue for each quantity listed and marginal revenue for each 1,000 increase in the quantity sold.
Marginal Revenue
(Dollars)
Price
Total Revenue
(Dollars) Number of CDs (Dollars)
25
12,000
24
13,000
23
14,000
22
15,000
21
16,000
20
17,000
Profit is maximized at a quantity of
CDs and a price of
This results in a profit of S
If you were Johnny's agent, you would advise Johnny to demand a recording fee of
from the record company.
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