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Part A: Assume you are a monopolist. Show the standard pricing on the graph below that identifies the profit- mamximing price and quantity. The Demand
Part A: Assume you are a monopolist. Show the standard pricing on the graph below that identifies the profit- mamximing price and quantity. The Demand curve is below in blue (Price is on the Y-axis, Quantity is on the X-axis). The Marginal Cost (MC) for each candy bar is $1.00. The MC curve is below in red. Shade the areas representing Consumer Surplus (CS) and Profit on the graph below. 56 $3 $2 $1 $0 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. Marginal Cost (MC) is still $1.00 and Fixed Costs (FC) are zero. $6 $5 54 53 52 51 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. Marginal Cost (MC) is still $1.00 and Fixed Costs (FC) are zero. $6 54 53 52 51 20 30 5 10 15 25
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