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A Textbook Publisher Is in Monopolistic Competition

Question 253

Multiple Choice

A textbook publisher is in monopolistic competition. The firm can sell no books at $100 a book, but for each $10 cut in price, the quantity of books it can sell increases by 20 books a day. The firm's average variable cost and marginal cost is a constant $20 per book. What is the firm's markup?


A) zero
B) $20
C) $40
D) $60

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