Is Advertising Profitable? Joe’s Gourmet Hamburgers is thinking about using advertising to differentiate its burgers from all the other burgers in town. An advertising agency has developed a campaign that will add $5 per hour to Joe’s costs. The agency also estimated the increases in demand it expects Joe’s Gourmet Hamburgers to get from the campaign.
1 The following table shows Joe’s Gourmet Hamburgers’
current demand and costs.

Joe’s Gourmet Hamburgers: Current Demand and Costs Quantity Sold/Hour ATC MC P MR 1 $26.50 $12.50 $12.00 $12.00 2 16.25 6.00 11.00 10.00 3 11.50 2.00 10.00 8.00 4 9.25 2.50 9.00 6.00 5 8.00 3.00 8.00 4.00 6 7.25 3.50 7.00 2.00 7 6.79 4.00 6.00 0 8 6.50 4.50 5.00 −2.00 ■

a. Joe’s current profit-maximizing quantity is hamburgers.
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b. His current profit-maximizing price is .
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c. At this quantity and price, Joe’s economic profit would be .