1) 2) 3) Demand and Marginal Revenue (1 point) Suppose demand for a product is given by 0,1 = 90 P. What is the equation for Marginal Revenue? Optimal Book Pricing (2 points) Suppose you just wrote your rst novel. After doing some research, you decide to self-publish and sell your book on Kindle. Your friend, who is a professional economist, estimates that demand for your book is 0,1 = 22 P, and HR = 22 20d, where Q is measured in thousands ofgbggks, and P represents price per ebook. a) Suppose your marginal cost is constant at $2 (say, for advertising on social media). You are considering charging a price of $14 per shook, Is this price too high or too low? Why? (1 point) b) What price should you charge per mm order to maximize prot? (1 point) Savor the Sweet Bakery (4 points) Savor the Sweet Bakery has been selling 550 boxes of cupcakes per month at a price of $19fbox. When they raised their price to $21fbox, they sold only 450 boxes. a) What is the price elasticity of demand for Savor the Sweet's cupcakes? (1 point) b) If the marginal cost is $14 per box of cupcakes, was the price increase a profitable decision? Why or why not? 1 point) c) Based only on the information in this question, would you recommend they change their price again? If so, why and in what direction? If not, why not? (1 point) d) Suppose several other bakeries opened up nearby and sold cupcakes similar in quality and taste to those of Savor the Sweet. How would this affect elasticity of demand for Savor the Sweet cupcakes? Describe how this change in elasticity of demand would affect the price mark-up of Savor the Sweet's cupcakes (I'm not looking for a specic number here). (1 point)