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Suppose Melody owns a business giving piano lessons. Assume that the market for piano lessons is perfectly competitive and that the equilibrium price of a

Suppose Melody owns a business giving piano lessons. Assume that the market for piano lessons is perfectly competitive and that the equilibrium price of a piano lesson is $20. Melody’s total costs vary depending on the number of piano lessons she offers each day, as shown in the table below.

Number of lessons per day

Total cost per day ($)

0

30

1

50

2

68

3

78

4

96

5

115

6

138

7

168

8

208


a. When Melody gives 3 lessons per day, what is her average variable cost?

b. What is the profit-maximizing number of lessons for Melody to give each day?

c. What is Melody's daily economic profit at her profit-maximizing number of lessons?

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