QUESTION 2 The CEO proudly announced at the allhands meeting that. alter a strong quarter. the start-up is now serving 3% of its potential market. You have been analyzing the rm's revenue and cost functions. which are R = 400 - 502 and C = 7.50 + 0.2502 (where R is revenue. C is cost. and Q is percentage ofthe potential market served). Looking to the future with visible excitement. the CEO goes around the room. asking each employee for one suggestion that could further increase the rm's protability. When it's your turn. you say: Hate to spoil the party. but we are not nearly recovering our costs with the revenue from each client we currently serve. Frankly. the best we can do is shutdown. '_.' Actually. we seem to be growing too fast. Reducing the number of clients we serve would increase our prot. since marginal revenue is currently less than marginal cost. To be honest. we are in a great spot and should just continue like this. Revenue from another client would be equal to the cost ofserving a new client. 'ZI' Keep adding clients! At the moment. revenue increases faster than cost