Question

An author has signed a contract in which the publisher promises to pay her $10,000 plus 20 percent of gross receipts from the sale of her book. True or false: If both the publisher and the author care only about their own financial return from the project, then the author will prefer a higher book price than will the publisher.

Answer 1

Answer:

False. The author will NOT prefer a higher book price than will the publisher.

Explanation:

It is evident from the diagram -please check the attached image to the exercise- that the author wants to set a lower price than the publisher (to sell the higher quantity) .