Question

Do you know how many newspaper companies are suffering from the big Revenue Drops and enormous Profit Losses [CO C]?
Let's think about All the resources that combine to produce Daily Newspapers:
Management, Editors, Reporters, Photographers, Delivery people, Printing Presses, Pulp Mills, pulp mill Workers, Ink Makers, Loggers, Logging truck Drivers and so on.

Then how come we can get a high-Quality newspaper less than one dollar?

Answer 1

There are business operations that require huge start up cost such as electricity utility or water treatment plant as well as a newspaper agency. The fact that there is a large and huge fixed cost, there are significant entry barriers. Considering this, we can imagine that the cost of production under such firms is composed of large fixed cost and a very small per unit cost

Such a firm can never recover its fixed cost if it sells too few units. For earning revenues that can generate economic profits, such firms have to produce a large number of units so large that average total cost continues to fall to a very low level. The newspaper market has relatively higher competition so it has to keep its price low. We can get a high-Quality newspaper less than one dollar because the newspaper agency prints a greater number of newspaper so that per unit cost is reduced to a very low level, perhaps lower than the market price. Those who are unable to produce and sell this large number, they suffer an economic loss.