Following weekly demand curve: Q = 8.5 - 0.05 * P, where Q is the number of cartons produced per week.You also used the following weekly cost curve: C = 100 + 38Q.You want to run the bakery as a profit maximizer.

Just before posting prices and telling the production department what to bake the chief financial officer comes running into your office with bad news.Variable costs just increased by $12 per carton.This means the cost curve is now C = 100 + 50 Q.

Q1 After this bad news, what is the right price to charge each week?

Q2 What is the right quantity to bake each week?

Q3 What are your expected profits from running the bakery each week?

Q4 Compared to the results using the original cost curve (C = 100 + 38Q), the increase in variable costs means the bakery manager should?

1. Change their price, but not change their quantity
2. Not change their price, but should change their quantity
3. Leave both price and quantity alone
4. Change both price and quantity