1. Marge has a demand for 2-liter bottles of Diet Coke given by the demand curve P =15- 0.5Q (or Q =30-2P), where P is the price of each 2-liter bottle and Q is the quantity of bottles consumed.Suppose the price schedule for 2-liter bottles of Diet Coke at Marge's local supermarket is as follows:

• First 15 bottles are $4/bottle
• All remaining bottles are only $2/bottle

1. How many 2-liter bottles does Marge consume?
2. 13
3. 14
4. 22
5. 26
6. 48
7. None of the above are correct.

5 points

QUESTION 8

1. Consider a firm that sells a single product, wants to maximize profits, and faces a linear, downward sloping demand curve. Marginal cost is equal to $1. If the firm is setting its output level and price where demand elasticity is equal to -0.8, which of the following statements is true?
2. The firm is not maximizing profit and should lower the price.
3. The firm is maximizing profit and should change nothing.
4. The firm is not maximizing profit and should choose the output level at which demand is unit-elastic.
5. The firm is not maximizing profit and should increase the price.
6. The firm is not maximizing profit and should increase output.