1.1. Suppose Sam sells apples in a competitive market, apples picked from his apple tree.

Assume all apples are equal in quality, but grow at different heights on the tree. Sam, being fearful of heights, demands greater compensation the higher he goes: So for him, the cost of grabbing an apple rises higher and higher, the higher he must climb, as shown in the Total Cost column below. The market price of an apple is

$0.50.

a. What is Sam's marginal revenue for selling apples?

b. Which apples does Sam pick first? Those on the low branches or high branches? Why?

c. Does this suggest that the marginal cost of apples is increasing, decreasing, or staying the same as the quantity of apples picked increases? Why?

d. Complete the table below.

Apples 2

3 4

5 6

Total Cost

$0.10

$0.22

$0.50

$1 .00

$1 .73

$2.78 Marginal Cost

$0.10 Marginal Revenue

$0.50 Change in Profit

$0.40

e. How many apples does Sam pick?