monopolistically competitive: There are at least two other brilliant lecturers Sally competes with.) The inverse demand for Sally’s lectures is given by P = 60 – 0.5Q, where Q measures the number of lectures Sally gives each week. The total cost of her delivering lectures is given by TC = 4Q + F, where F represents her fixed costs. The marginal cost of each lecture is therefore $4.

a. To maximize profit, how many lectures should Sally deliver each week?

b. What price will Sally charge for her lectures?

c. How much producer surplus will Sally earn?

d. What must Sally’s fixed costs be for the industry to be in long-run equilibrium? If Sally’s fixed costs were lower than this, what would you expect to happen to the demand for Sally’s lectures in the long run?