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Bugs Bunny (BB) and Daffy Duck (DD) compete against each other selling carrot cakes in Brooklyn, NY (Flatbush section). Each incurs a marginal cost (MC)

Bugs Bunny (BB) and Daffy Duck (DD) compete against each other selling carrot cakes in Brooklyn, NY (Flatbush section). Each incurs a marginal cost (MC) of three (3) for each carrot cake made. Neither incurs any fixed costs. Law or custom requires that they both set the same price at five (5) per carrot cake. There are a constant set of 100 individuals that buy carrot cake on a given day, which is always split evenly between BB and DD.

Bugs Bunny and Daffy Duck can each engage in promotion campaigns, however, to sell additional carrot cakes. These promotion campaigns unfortunately provide some spillover benefits to the rival.

  • Bugs Bunny can hire Yosemite Sam for promotion activities (at a cost of 30) which increases the number of carrot cakes sold by 15 (i.e., from 100 to 115): 10 for BB and 5 for DD.
  • Daffy Duck can hire his nephews (Huey, Dewey and Louie) for promotion activities (at a cost of 5 per nephew or 15 in total) which increases the number of carrot cakes sold by 20 (i.e., from 100 to 120): 5 for BB and 15 for DD.
  • These promotion campaigns are independent but aggregate if jointly implemented. In other words, the number of carrot cakes sold increases by the additional amounts and in the proportion indicated for each if BB and DD both utilize their respective promotion campaigns.

How much profit is earned if BB hires Yosemite Sam but DD does not hire his nephews?

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