1. A publisher faces the following demand schedule for the next novel from one of their most popular authors. The author

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1. A publisher faces the following demand schedule for the next novel from one of their most popular authors. The author gets paid $2 million for writing the book and the marginal cost of publishing the book is a constant $10 per book. It might be easier/desirable to do this one in Excel but that's up to you. Drawing/working here in Word is fine too. Table 1: Demand Curve for Books Price $100 Quantity Demanded 0 90 80 70 60 50 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000 40 30 20 10 0 1 a. Calculate the total revenue, total cost and profit at each QD level. What quantity would the profit-maximizing publisher choose? What price should they charge to get to that point?
b. Calculate the marginal revenue. How does the marginal revenue compare to the price? c. In Excel or here using Draw, graph the marginal revenue curve, marginal cost curve and demand curve on the same graph. At what quantity do the marginal revenue and marginal cost curve cross? How does that compare to your answer to a.? d. Is the business maximizing total surplus here? If so, how do you know? If not, how do you know? e. Imagine the author needed to be paid $3 million instead of $2 million. How would this affect the publisher's decision about what price to charge for the book? Why is that the case? f. Say the publisher was not profit-maximizing but instead wanted to maximize economic efficiency. What price would they charge for the book? How profit would they earn in the long run?
2. Over the weekend, the NFL draft will occur. While not the most exciting football related thing ever (unless you're a Jets or Jaguars fan), it's what sets teams up for making a run to the Super Bowl. The NFL has trademarked the name “Super Bowl” and advertisers who use the phrase must pay the NFL a fee. To circumvent this, many advertising businesses use the phrase, "The Big Game" instead, to the point where the NFL has considered trademarking "The Big Game" as well. a. Why does the government all firms to trademark or patent their products? What are the positives to this? What are the negatives? b. Would consumers gain or lose if the NFL were allowed to trademark the phrase, “The Big Game” in addition to the "The Super Bowl"?