A Textbook Publisher Is in Monopolistic Competition

question 150

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 firm advertises, its maximum economic profit is

• A) zero.
• B) $800.
• C) $1,200.
• D) -$400.

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Definitions:

Mean

A statistical measure often referred to as the average, calculated by adding all the numbers in a data set together and then dividing by the count of those numbers.

Unusual Events

Occurrences that deviate from what is standard, normal, or expected, often eliciting curiosity or concern.

Dating Frequency

A term that refers to how often a person goes on dates or engages in romantic outings with potential partners.

Physical Attractiveness

How much a person's physical attributes are viewed as beautiful or aesthetically pleasing by others.