Ariana Grande has just finished recording her latest CD. Her record company’s marketing department determines that the demand for the CD is as follows:

The company can produce the CD with no fixed cost and a variable cost of $5 per CD.

a. Find total revenue for quantity equal to 10,000, 20,000, and so on. What is the marginal revenue for each 10,000 increase in the quantity sold?

b. What quantity of CDs would maximize profit?
What would the price be? What would the profit be?

c. If you were Ariana’s agent, what recording fee would you advise her to demand from the record company? Why?

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Price $24 22 20 18 16 14 Number of CDs 10,000 20,000 30,000 40,000 50,000 60,000