As of 2018, Dan Brown’s novel Origin has been on The New York Times Best Sellers list for at least 23 weeks and has sold about 5.8 million copies. In book publishing, fixed costs (author royalty, marketing, editing, introduction costs, etc.) are high and marginal costs are low. Assuming that the fixed cost of producing Origin is $2 million, what is the average fixed cost if the publisher produces 1 million copies? 2 million copies? 5 million copies? Now suppose that the marginal cost of the print version of Origin is $1.8 per book and is the same for each book up to 5 million copies. If marginal cost (MC) includes all variable costs, will they be the same on a graph?
What is the average total cost of the book if the publisher produces 1 million copies? 2 million copies? 5 million copies?
Sketch the average fixed cost (AFC) curve and the average total cost (ATC) curve facing the publisher.