Assume a monopolistic publisher has agreed to pay an author 15 percent of the total revenue from the sales of a textbook. Will the author and the publisher want to charge the same price for the book?
2006-12-03 13:51:47 · 2 answers · asked by sld 1 in Education & Reference ➔ Homework Help
Here's a shot from a non-economic mind. If the publisher is monopolistic, then he has a product monopoly and therefore controls the marketplace. He is offering 15% of total sales, regardless of profits? So, the publisher has the greatest overall concern about profit - the author the highest concern for gross sales. They will probably agree on price - the publisher for profit reasons, the author for the purposes of going out and promoting to increase overall sales based on generating specific interest. I'd have to say, yes...they will probably be able to agree on price...again, not my field.
2006-12-03 14:26:33 · answer #1 · answered by MS C 2 · 0⤊ 0⤋
Yes.
There is only one price by which the most amount of money can be made on a good or service. Remember that supply and demand affect how markets clear. If the book's price is increased, the total books sold will decrease so that revenues will decrease. Therefore the author will not make any more money than if the price was lower.
2006-12-03 22:23:49 · answer #2 · answered by Mikey C 5 · 0⤊ 0⤋