The final volume of the Harry Potter saga sold more than 11M copies in the first 24 hours it went on sale in the US and Britain to become the fastest-selling book in history, publishers said. In book publishing, fixed costs are very high and marginal costs are very low and fairly constant. Suppose that the fixed cost of producing the new Harry Potter volume is $30M. What is the average fixed cost if the publisher produces 5M copies?
Now suppose that the marginal cost of a Harry Potter book is $1.50 per book and is the same for each book up to 40M copies. Assume that this includes all variable costs. Explain why in this care marginal cost is a horizontal line, as is average variable cost. What is the average total cost of the book if the publisher produces 10M copies?
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Get Help Now!Sketch the average fixed cost curve and the average total cost curve facing the publisher.
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