Smith and Wesson have written a new managerial economics book for which they rec

Question

Smith and Wesson have written a new managerial economics book for which they receive royalty payments of 15% of total revenue from sales of the book. Because their royalty income is tied to revenue, non profit, they want the publisher to set price so that total revenue is maximized. However, the publisher's objective is to maximize profit. If the total revenue function is TR= 100,000Q-10Q^2, and the total cost function is TC= 10,000+20Q+Q^2, determine a.) The output level that will maximize total royalty revenue and the amount of royalty income that Smith and Wesson would receive. b.) The output level that would maximize profit to the publisher. Based on this level of output, what is the amount of royalty income that Smith and Wesson would receive? Compare the royalty income of Smith and Weson to that determined in part a.)

Explanation / Answer

TR=100,000Q-10Q^2 and the total cost function is TC=10,000+20Q+Q^2 to maximize find dtr/dq and equate it to 0 . u will get value of q from here . use this value to get TR amount of royalty = 15% of tr

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