A Textbook Publisher Is in Monopolistic Competition

question 300

Multiple Choice

A textbook publisher is in monopolistic competition. If the firm spends nothing on advertising, it can sell no books at $100 a book, but for each $10 cut in price, the quantity of books it can sell increases by 20 books a day. The firm's total fixed cost is $2,400 a day. Its average variable cost and marginal cost is a constant $20 per book. If the firm spends $1,200 a day on advertising, it can increase the quantity of books sold at each price by 50 percent. If the publisher advertises, its profit maximizing level of output is

• A) 120 books per day.
• B) 80 books per day.
• C) 160 books per day.
• D) 100 books per day.

---

Definitions:

Rhonchi

Low-pitched, rattling lung sounds that suggest blockage or secretion in the large airways.

Auscultating

The act of listening to the sounds made by internal organs, especially the lungs and heart, typically with a stethoscope, as part of a medical examination.

Pneumonia

An inflammatory condition of the lung, often caused by infection, that leads to alveolar filling with fluid or pus.