A small school has 100 students. You have been commissioned school photographer.

1. You have been offered to photograph a model action shot for a salary of $100 on the same day as the school photos are scheduled. You can't do both. What is the limited resource, and as what kind of cost do you consider the missed salary of this photoshoot?(2 marks)

2. Without calculating, do you think parents' price elasticity of demand for photos of their children is generally speaking price-elastic or price-inelastic (or neither/both)? Give your reason.(2 marks)

3. Since you are the only commissioned school photographer, you are a monopolist for this job. Suppose that you want to charge a uniform price per copy (i.e. be a single-price monopolist).From experience, you know that parents' demand for copies of each child's photograph is as given in the table below.Your marginal cost is constant at $2.00 per copy.

Price ($/copy)

Quantity demanded per child

10

1

8

2

6

3

4

4

2

5

1

6

a. How much will you charge to maximise your profit? How many copies per child will you sell? Include the steps of your calculations.(8 marks)

b.What is your profit from this job? Show your calculations.(4 marks)

c. How much is the parents' consumer surplus? Show your calculations.(4 marks)