A small city has a number of hot dog stands operating throughout the CBD area. Suppose that each vendor has a marginal cost of R1,50 per hot dog sold and no fixed cost. Suppose the maximum number of hot dogs that any one vendor can sell is 100 per day.

Suppose the city decides to sell permits. What is the maximum price the vendor would

pay for a permit per day?

[1] R50,00

[2] R75,00

[3] R100,00

[4] None of the above.