Why do authors (who are paid fixed royalties per book sold) and publishers (who

Question

Why do authors (who are paid fixed royalties per book sold) and publishers (who are presumably profit maximizers) differ in their thinking about the best price for a book?

D

What is the relationship between total revenue and elasticity of demand? Prove this with some examples using numbers, i.e., make up some numbers for price and quantity along a demand curve and find both elasticities and total revenues that show the relationship between them.

In general, explain what an elasticity is (starting from the general formula).

Carefully explain the concepts of consumer and producer surplus.

Explain why some firms shut down when losing money while others remain in business. Also show this graphically.

What is the optimality condition in the product market and why must it be so?

Graphically show deadweight welfare loss due to monopolies and then explain what it means. How can we see or feel this deadweight welfare loss?

Sh

Explanation / Answer

essential features of Edward Chamberlin's theory of monopolistic competition are conveniently summarized using his ingeniously constructed graph. Chamberlin made his analysis tractable by assuming that the demand for each firm

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