2.4 The price in a perfectly competitive market for copper bracelets is unknown before the managers must decide on how much output to produce, so the managers produce the quantity of bracelets that sets the expected marginal revenue equal to marginal cost, of E3MR4 = MC.

There is an equal probability that the price will be $12 or $8. If the firm’s marginal cost function is MC = 5 + 0.01Q, what is the value of a perfect forecast of the demand?