In Gomorrah, New Jersey, there is only one newspaper, the Daily Calumny. The demand for the paper
Question:
(a) Calculate the price elasticity of demand for the Daily Calumny. ______. Does the price elasticity depend on the amount of scandal reported? ______. Is the price elasticity constant over all prices? ______.
(b) Remember that MR = P(1 + 1/ɛ). To maximize profits, the Daily Calumny will set marginal revenue equal to marginal cost. Solve for the profit-maximizing price for the Calumny to charge per newspaper. ______. When the newspaper charges this price, the difference between the price and the marginal cost of printing and delivering each newspaper is ______.
(c) If the Daily Calumny charges the profit-maximizing price and prints 100 column inches of scandal, how many copies would it sell? (Round to the nearest integer.) ______. Write a general expression for the number of copies sold as a function of S: Q(S) = _________.
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