question archive Bob's Books is the only bookstore in town
Subject:MarketingPrice:2.88 Bought3
Bob's Books is the only bookstore in town. The graph shows the demand curve for books and Bob's Books' marginal revenue curve and the marginal cost curve. Bob's Books maximizes its profit by charging _____ a book and selling _____ books a year.
a. $32; 6,000
b. $12;26,000
c. $8; 15,000
d. $23; 15,000
Here, it is given that Bob's book store is the only store in the town; therefore, Bob will act as a monopolist in the town; thereby, sell the number of books at which his marginal revenue from selling an additional unit is the same as the additional marginal production cost for books. However, he will charge the price according to a willingness by the buyers.
Thus, it can be inferred that MR = MC when the quantity of books is 15,000 and the price/cost of books is $23 when demand by buyers is considered.