Mateo’s room overlooks, from some distance, a major league baseball stadium. He decides to rent a telescope for $50.00 a week and charge his friends and classmates to use it to peep at the game for 30 seconds. He can act as a single-price monopolist for renting out “peeps.” For each person who takes a 30-second peep, it costs Mateo $0.20 to clean the eyepiece. The accompanying table shows the information Mateo has gathered about the demand for the service in a given week.

Price of peep            Quantity of peeps demanded
$1.20.........................................................................0
1.00.......................................................................100
0.90.......................................................................150
0.80.......................................................................200
0.70.......................................................................250
0.60.......................................................................300
0.50.......................................................................350
0.40.......................................................................400
0.30.......................................................................450
0.20.......................................................................500
0.10.......................................................................550

a. For each price in the table, calculate the total revenue from selling peeps and the marginal revenue per peep.

b. At what quantity will Mateo’s profit be maximized? What price will he charge? What will his total profit be?

c. Mateo’s landlady complains about all the visitors coming into the building and tells him to stop selling peeps. But, if he pays her $0.20 for every peep he sells, she won’t complain. What effect does the $0.20-per-peep bribe have on Mateo’s marginal cost per peep? What is the new profit-maximizing quantity of peeps? What effect does the $0.20-per-peep bribe have on Mateo’s total profit?