Issue: You make candy bars that you mail to customers. Your delicious candy bars give you a lot of pricing power. Your customers have identical demand curves for your candy bars.

Part A: Draw the demand curve on a graph using the following demand curve equation: P=5-0.2Q or Q=25-5P

Part B: Draw the Marginal Cost (MC) curve on the same graph to represent $1/candy bar. Assume that Fixed Costs (FC) are zero. Part C: You are a monopolist. Show the standard pricing analysis on the same graph that identifies the profit-maximizng price and quantity. Shade areas representing the Consumer Surplus (CS) and Profit. Part D: 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 a graph and shade areas representing CS and Profit.

Part E: You have a new idea: 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 a new graph representing the price and Profit answers (use the same demand curve equation and marginal cost in Parts A and B).