2.4 You are a manager at a pizza restaurant in Scottsdale, Arizona. The demand for slices of pizza is random. The market is perfectly competitive, and on any given day, the price is either $6.60 or $7.20 with a probability of 0.50 for either possibility. The marginal cost of producing pizza is MC = 0.02Q.

a. What quantity maximizes your expected profit?

b. Compared to the profit if you knew the actual price in advance, if you produce the amount calculated in part a how much profit does your firm lose if the actual price turns out to be $7.20? If it turns out to be

$6.60?