Professor Jones has just written his first textbook on the Economics of Terrorism. Market research suggests that the demand curve for this book will be Q = 2,000 – 100P, where P is the price of the book. It will cost $1,000 to set the book in type. This setup cost is necessary before any copies can be printed. In addition to the setup cost, there is a marginal cost of $4 per book for every book printed. Show your work.
What is the total revenue function for Professor Jones’ book?
What is the total cost function for producing the book?
What is the marginal revenue function? The marginal cost function?
What is the profit maximizing quantity of books to sell?
