10.*Louisa, a renowned chef, owns one of the 1,000 spaghetti restaurants in Sicily. Each restaurant, including her own, currently serves 100 plates of spaghetti a night at $5 per plate. Louisa knows she can develop a new sauce, at the same cost as the current sauce, that would be so tasty that all 100,000 spaghetti eaters would want to buy her spaghetti at $10 per plate. There are two problems: developing the new sauce would require some experimental cost and the other spaghetti producers could figure out the recipe after one day. LO4

a. Assuming that Louisa could accommodate as many additional customers as she chose at no extra cost through her take-out window, what is the highest experimental cost Louisa would be willing to incur?

b. How would your answer change if Louisa could enforce a year-long patent on her new sauce? (Assume that the interest rate is zero.)