### Profit-maximizing price of nothing

Assignment Help Macroeconomics
##### Reference no: EM131163363

Consider the problem of setting a price for a book. The marginal cost of production is constant at \$20 per book. The publisher knows from experience that the slope of the demand curve is minus-\$0.20 per textbook: Starting with a price of \$44, a price cut of \$0.20 will increase the quantity demanded by one textbook, or for every dollar the price falls, five more textbooks are purchased. For example, here are some combinations of price and quantity: a. The publisher will choose the profit-maximizing price of \$nothing. (Choose the price that comes closest to maximizing profit from the table above.)

 Price per textbook: \$44 \$40 \$36 \$32 \$30 Quantity of textbooks: 80 100 120 140 150

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