Professor Kremepuff's New, User-Friendly Textbook Has Just Been Published

question 10

Multiple Choice

Professor Kremepuff's new, user-friendly textbook has just been published.This book will be used in classes for two years, after which 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 used copies for p₂/2 and resell them to students in the second year for p₂.(Students are indifferent between new and used copies.) The cost to a student of owning the book during the first year is therefore p₁ - p₂/2.In the first year of publication, the number of students willing to pay $v to own a copy of the book for a year is 50,000 - 500v.The number of students taking the course in the first year who are willing to pay $w to keep the book for reference rather than sell it at the end of the year is 50,000 - 2,500w.The number of persons who are taking the course in the second year and are willing to pay at least $p for a copy of the book is 30,000 - 500p.If the publisher sets a price of p₁ in the first year and p₂ <= p₁ in the second year, then the total number of copies of the book that the publisher sells over the two years will be

• A)100,000 - 500(p₁ - p₂/2).
• B)80,000 - 500(p₁ + p₂/2).
• C)100,000 - 500p₁ - 500p₂.
• D)100,000 - 1,500p₂.
• E)80,000 - 750p₂.

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Definitions:

Medium-Grade Quality

Describes products or materials that meet a standard of performance or durability that is considered average or moderate in comparison to others.

Breach of Warranty

The failure to fulfill the terms of a promise, guarantee, or warranty in a contract, leading to potential legal action for damages.

Repossesses

The act of a lender or seller taking back property when the borrower fails to make payments as agreed.

Prior Claim

A right or claim that takes precedence over others, having seniority in time or order of obligation.