Economics
Economics
5th Edition
ISBN: 9781319066604
Author: Paul Krugman, Robin Wells
Publisher: Worth Publishers
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Chapter 13, Problem 1BCQ
To determine

Concept Introduction:

Monopoly: This refers to the condition in a market where there is a single person or company who sells a particular good or service and there is no competitor. In a monopoly, the supplier is free to fix any price, since the consumers have no alternative available.

Expert Solution & Answer
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Explanation of Solution

  • In the given case, the online retailers like A Company earn surplus with the sale of books from top authors.
  • The publishers like H Company pay a share of their sales to the online retailers. Hence, the retailers earn surplus from them too.
  • The publishers earn by publishing the books from the best-selling authors. The books published are in the form of paper, e-books and hardcover.
  • Here, the major share of revenue, which is 30-50% of A Company, comes from the sales of the books published by H Company.
  • The surplus by authors is earned by the sale of their books to the publishers to further publish the copies for the consumers.

Conclusion:

Thus, the surplus is earned by authors, publishers and retailers in the above given manner.

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