1. We will want to develop a VBA subroutine that will, given the unit cost, fixed cost, and demand curve, derive the profit as a function of quantity and calculate the profit-maximizing quantity and maximum profit.

If Sally, who clearly had a monopoly on fresh lemonade in the neighborhood, would have been interested in "price searching", then she would have charged $1.15 per cup and maximized her profit. This would have increased her producer surplus at the expense of consumers. The overall surplus would have shrunk (deadweight loss).

2. Expand the scope of the subroutine from Problem 4.3 so that it will calculate the change in consumer and producer surplus and calculate the deadweight loss for a random price searching value.

2 parts