Professor Kremepuff Has Published a New Textbook

question 16

Multiple Choice

Professor Kremepuff has published a new textbook. This book will be used in classes for two years, at which time it will be replaced by a new edition. The publisher charges a price of $p₁ in the first year and $p₂ in the second year. After the first year, bookstores buy back copies from students for $ and resell them to students in the second year for $p₂. (Students are indifferent between new and used copies.) The cost to a student in the first year of owning the book for a year is therefore $(p₁ - ) . In the first year of publication, the number of students willing to pay $v to own the book for a year is 60,000 - 1,000v. The number of students taking the course in the first year who are willing to pay at least $w to keep the book for reference rather than resell it is 60,000 - 5,000w. In the second year, the number of students who have not previously taken the course and are willing to pay at least $p for a copy of the book is 50,000 - 1,000p. If the publisher sets a price of $p₁ in the first year and $p₂ in the second year, with p₁ B3 p₂, then the total number of copies that the publisher sells over two years will be equal to

• A) 110,000 - 1,000(p₁ +).
• B) 120,000 - 1,000(p₁ -).
• C) 120,000 - 3,000p₂.
• D) 120,000 - 1,000p₁ - 1,000p₂.
• E) 110,000 - 1,500p₂.

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Definitions:

Accounting Equation

The fundamental principle of accounting that states Assets = Liabilities + Equity, ensuring that a company's financial statements are balanced.

Purchase Supplies

The act of acquiring materials and consumable items required for the production process or office use.

Assets

Resources owned by a company that are expected to provide future economic benefits.

Investing Activity

Financial activities related to acquiring or disposing of non-current assets, such as property, plant, and equipment, which are recorded on a company's cash flow statement.