Book Publishers Often Use Price Discrimination Across Time to Increase

question 117

Essay

Book publishers often use price discrimination across time to increase profits.Toni Morrison's book, A Mercy, was published as a hardcover edition in November 2008 at a price of $23.95.In August 2009, the paperback version was published at a price of $15.00.Assume that 100,000 hardcover books were sold to hard-core Toni Morrison fans in November 2008, and 400,000 paperback books were sold to casual readers in August 2009.Illustrate each of these situations graphically.Assume that the marginal cost of the hardcover version is $2.00 and the marginal cost of the paperback version is $0.75.

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Definitions:

Relaxin

Polypeptide hormone secreted by the corpus luteum and placenta during pregnancy; facilitates the birth process by causing a softening and lengthening of the pubic symphysis and cervix.

FSH Secretion

The release of Follicle Stimulating Hormone, a gonadotropin involved in the regulation of reproductive processes, such as growth of ovarian follicles in women and spermatogenesis in men.

Connective Tissue

Tissue in the body designed to connect, support, or isolate various organs and tissue types.

Adrenal Cortex

The outer part of the adrenal gland that produces steroid hormones which regulate metabolism, immune response, and salt and water balance.