Calculations and Graphical Analysis Questions:

2. Ron's Window Washing Service is a small business that operates in the perfectly competitive residential window washing industry in Evanston, Illinois. The short-run total cost of production is STC(Q) = 40+ 100 + 0.102, where Q is the number of windows washed per day. The corresponding short-run marginal cost function is SMC(Q) = 10 + 0.20. The prevailing market price is $20 per window. (15 marks) A. How many windows should Ron wash to maximize profit? (3 marks) B. What is Ron's maximum daily profit? (3 marks) C. Graph SMC, SAC, and the profit-maximizing quantity. On this graph, indicate the maximum daily profit. (3 marks) D. What is Ron's short-run supply curve, assuming that all of the $40 per day fixed costs are sunk? (3 marks) E. What is Ron's short-run supply curve, assuming that if he produces zero output, he can rent or sell his fixed assets and therefore avoid all his fixed costs