Penelope's Parcel Delivery Firm uses as inputs a truck, a driver, and petrol.The truck is hired at a cost of $50 per day, and the delivery firm must agree to a contract to hire the truck for at least 1 day.On any day the marginal cost of the extra driver time and petrol required to make an extra delivery equals $5 times the number of deliveries made.(For example, MC of the 1stdelivery is $5, MC of the 2nddelivery is $10, MC of the 3rddelivery is $15, and so on.)The parcel delivery market is perfectly competitive.

a) (5.5 marks) Suppose the market price is 20. What is the profit-maximising quantity the firm will produce? Should Penelope's Parcel Delivery firm operate in the short-run? Explain your answer.

b) (5 marks) Suppose that market demand for deliveries (per day) is:

Price per 15 20 delivery ($) 25 30 35 Market 140 120 100 demand 80 60Price 15 20 25 30 35 Qty 180 160 demanded 140 120 100