Campus Bookstore is the only textbook supplier in the town,a profit-maximizing business.The table below represents the reservation prices for the eight students enrolled in the class for which this book is required. $$\begin{array} { c c }
\text { Customer } & \begin{array} { c }
\text { Reservation Price } \
\text { (\$/book) }
\end{array} \
\mathrm { Q } & 60 \
\mathrm { R } & 54 \
\mathrm {~S} & 48 \
\mathrm {~T} & 42 \
\mathrm { U } & 36 \
\mathrm {~V} & 30 \
\mathrm {~W} & 24 \
\mathrm { X } & 18
\end{array}$$
Assume that the marginal and average total cost for each book is $12.
Refer to the information above.At the profit maximizing price how many books will they sell?

Question

Campus Bookstore is the only textbook supplier in the town,a profit-maximizing business.The table below represents the reservation prices for the eight students enrolled in the class for which this book is required. $$\begin{array} { c c } 
\text { Customer } & \begin{array} { c } 
\text { Reservation Price } \
\text { (\$/book) }
\end{array} \
\mathrm { Q } & 60 \
\mathrm { R } & 54 \
\mathrm {~S} & 48 \
\mathrm {~T} & 42 \
\mathrm { U } & 36 \
\mathrm {~V} & 30 \
\mathrm {~W} & 24 \
\mathrm { X } & 18
\end{array}$$
Assume that the marginal and average total cost for each book is $12.
Refer to the information above.At the profit maximizing price how many books will they sell?

Quizplus · Accepted Answer

The profit-maximizing price is where marginal cost equals marginal revenue. The bookstore will sell to students whose reservation price is above the marginal cost of $12. The highest price they can charge while still selling to the maximum number of students is $36, which is the reservation price of student U. At this price, they can sell to students Q, R, S, T, and U, totaling 5 books.

Campus Bookstore Is the Only Textbook Supplier in the Town,a