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24.5 (1) In Gomorrah, New Jersey, there is only one newspaper, the
Daily Calumny. The demand for the paper depends on the price and the
amount of scandal reported. The demand function is Q = 15S1=2P−3,
where Q is the number of issues sold per day, S is the number of column
inches of scandal reported in the paper, and P is the price. Scandals
are not a scarce commodity in Gomorrah. However, it takes resources to
write, edit, and print stories of scandal. The cost of reporting S units
of scandal is $10S. These costs are independent of the number of papers
sold. In addition it costs money to print and deliver the paper. These
cost $:10 per copy and the cost per unit is independent of the amount
of scandal reported in the paper. Therefore the total cost of printing Q
copies of the paper with S column inches of scandal is $10S + :10Q.
(e) If the Daily Calumny charges its profi t-maximizing price, and prints
the proFI t-maximizing amount of scandal, how many column inches of
scandal should it print?
How many copies
are sold
and what is the amount of profi t for the Daily
Calumny if it maximizes its pro ts?
Please explain how to go about doing it. Please!
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