3. For the next year, Dunder-Mifflin is planning to expand its paper business beyond the East Coast to the Midwest. Ryan used all the tools that he learned at business school to estimate Dunder-Mifflins demand for paper in the Midwest. He estimates that the amount of sales (in thousands of tons) that Dunder Mifflin would make if their price was p (per ton), is equal to D(p) = 10-p/40. The cost of producing one ton of paper is equal to $40.

Option 3: Trust Dwight and Mose to run a production plant in their beet farm. Unfortunately, this is a risky option. With probability 70% they can produce unlimited amounts of paper, but with probability 30% there are breakdowns in which case they can only produce 4,000 tons of paper in a year. This option would cost $450,000 for the year.

c) What is the optimal price and the optimal revenue if the production capacity is 4,000 tons ?

d) What is their (expected) profit if they go with this option?