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Profit-maximizing price of nothing

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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

Reference no: EM131163363

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