The publisher of a magazine gives his staff the following information:
| Current price |
$2.00 per issue |
| Current sales |
150,000 copies per month |
| Current total costs |
$450,000 per month |
He tells the staff, "Our costs are currently $150,000 more than our revenues each month. I propose to eliminate this problem by raising the price of the magazine to $3.00 per issue. This will result in our revenue being exactly equal to our cost." Do you agree with the publisher's analysis? Explain. (Hint: Remember that a firm's revenue is calculated by multiplying the price of the product by the quantity sold.)