Price-setting firm.Apple sellsiWidgets. It sells moreiWidgetsthe lower the price it charges consumers. The demand foriWidgetsis given by the equationWTP= 2,000 - 100Q, as shown in the table below. Meanwhile, it costs Apple $1,000 to develop theiWidgetand $100 to produce eachiWidget, soC(Q) = 1,000 + 100Q. This information will allow you to find the equilibrium price (P), quantity (Q), and profit ()

1. Copy and paste the table above into a spreadsheet.
2. Verify that the consumers' willingness-to-pay (WTP) in the spreadsheet is identical to the equation listed above.
3. Calculate Apple's cost (C(Q)) of producing 1, 2, ..., 15 units.
4. Express Apple's average cost (AC) as a function ofQ. In your spreadsheet, calculate theACof producing 1, 2, ..., 15 units.
5. Express Apple's marginal cost (MC) as an equation. In your spreadsheet, calculate theMCof producing 1, 2, ..., 15 units.
6. In your spreadsheet, calculate the Apple's revenue (R) when it produces 1, 2, ..., 15 units. (Do you love math? Optional:Express Apple'sRsolely as a function of the Q using the demand curve given above.)
7. In your spreadsheet, calculate Apple's marginal revenue (MR) when it produces 1, 2, ..., 15 units. (Optional:If you express Apple'sRsolely as a function ofQ,you can calculate the MR asdR/dQ.)
8. Using what you know about Apple'sMCandMR, what quantity ofiWidgetsmaximizes Apple's profits? Why?
9. Verify your answer in (h) by calculating Apple's Profit when it produces 1, 2, ..., 15 units. How much profit does Apple earn producing the profit-maximizing quantity ofiWidgets?
10. Using your answer in (i), calculate the price Apple would have to sell itsiWidgetsfor to make the same profit when it produces 1, 2, ..., 15 units. Use this equation to create values in theIsoprofitcolumn of your spreadsheet.
11. Create a figure showing Apple'sWTP,AC,MC,MR, andIsoprofitcurves. Explain why your answer in (h) maximizes Apple's profits using the MC and MR curves. Explain your answer using the WTP andIsoprofitcurves.
12. Is the profit-maximizing price and quantity efficient? Explain.
13. (Optional: What quantity ofiWidgetswould maximize the economic surplus?)