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For Parts A, B, and C below, the following information applies. The Demand curve is in blue (Price is on the Y-axis, Quantity is on
For Parts A, B, and C below, the following information applies. The Demand curve is in blue (Price is on the Y-axis, Quantity is on the X-axis). o For reference, the Demand curve equation is P=5-.02Q or Q=25-5P The Marginal Cost (MC) curve is in red. MC is always $1.00. There are no Fixed Costs (FC) Part A: Assume you are a monopolist. Show the standard pricing on the graph below that identifies the profit- mamximing price and quantity. Shade the areas representing Consumer Surplus (CS) and Profit on the graph below. 56 54 53 $1 5 10 15 20 25 30 Part B: Assume that the following quantity discount exists: The first 10 candy bars are $3 each and any candy bars purchased over a quantity of 10 or more are offered at a discounted price. What discount price will maximize Profit? Show this quantity discount arrangement on the graph below and shade the areas representing CS and Profit. 56 $5 54 53 52 51 0 5 10 15 20 25 30Part C: Your new idea is to only sell packages of 20 candy bars. What is the profit-maximizing price for a 20-pack of candy bars? What is the resulting Profit? Shade the areas on the graph below representing the price and Profit answers. $5 $4 53 $1 5 10 15 20 25 30
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