A firm that sells e-books - books in digital form downloadable from the Internet - sells all e-books relating to do-it-yourself topics (home plumbing, gardening, and so on) at the same price. At present, the company can earn a maximum annual profit of $20 comma 000 when it sells 35 comma 000 copies within a year's time. The firm incurs a 45-cent expense each time a consumer downloads a copy, but the company must spend $140 comma 000 per year developing new editions of the e-books. The company has determined that it would earn zero economic profits if price were equal to average total cost, and in this case it could sell 30 comma 000 copies. Under marginal cost pricing, it could sell 110 comma 000 copies. In the short run, to the nearest cent, what is the profit-maximizing price of e-books relating to do-it-yourself topics? $ nothing.
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A firm that sells e-books - books in digital form downloadable from the Internet - sells all e-books...
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