A textbook publisher finds himself in monopolistic competition. This company cannot sell books at a price of $ 100 pesos per book. But for each decrease of $ 10 pesos that he makes in the price, the number of books he manages to sell increases by 20 daily books. The fixed cost of the company is $ 2,400 pesos per day. The average variable cost and the marginal cost of the company is constant at $ 20 pesos per book. If the business spends $ 1,200 a day on advertising, it can increase the number of books sold at each price by 50%. What is the price that maximizes the profits of the company when advertising is used? $ 60 $70 $50 $ 40
A textbook publisher finds himself in monopolistic competition. This company cannot sell books at a price of $ 100 pesos per book. But for each decrease of $ 10 pesos that he makes in the price, the number of books he manages to sell increases by 20 daily books. The fixed cost of the company is $ 2,400 pesos per day. The average variable cost and the marginal cost of the company is constant at $ 20 pesos per book. If the business spends $ 1,200 a day on advertising, it can increase the number of books sold at each price by 50%. What is the price that maximizes the profits of the company when advertising is used? $ 60 $70 $50 $ 40
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![Economics
A textbook publisher finds himself in monopolistic
competition. This company cannot sell books at a
price of $ 100 pesos per book. But for each
decrease of $ 10 pesos that he makes in the price,
the number of books he manages to sell increases
by 20 daily books. The fixed cost of the company is
$ 2,400 pesos per day. The average variable cost
and the marginal cost of the company is constant
at $ 20 pesos per book. If the business spends $
1,200 a day on advertising, it can increase the
number of books sold at each price by 50%. What
is the price that maximizes the profits of the
company when advertising is used?
$ 60
$ 70
$ 50
$ 40](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd0f324ec-8a94-4c3a-95aa-b55d47159498%2Fb596d043-2270-41ab-a0ba-f1e24a8f3903%2F8weimip_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Economics
A textbook publisher finds himself in monopolistic
competition. This company cannot sell books at a
price of $ 100 pesos per book. But for each
decrease of $ 10 pesos that he makes in the price,
the number of books he manages to sell increases
by 20 daily books. The fixed cost of the company is
$ 2,400 pesos per day. The average variable cost
and the marginal cost of the company is constant
at $ 20 pesos per book. If the business spends $
1,200 a day on advertising, it can increase the
number of books sold at each price by 50%. What
is the price that maximizes the profits of the
company when advertising is used?
$ 60
$ 70
$ 50
$ 40
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 5 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education