Randy produces aromatic hops on his property. The statewide brewery industry likes buying the local hops Randy produces, and there are several other farmers producing similar varieties. Randy's cost of production is TC = 120 - 6Q + Q2 so his marginal cost is MC = 2Q - 6 and his fixed cost is $120. According to research economists, the inverse demand for the state's aromatic hops is P = 78 - 2Qd.

a.What price should Randy charge to maximize profit?

b.How many should the firm produce?

c.What is his profit?

d.Since RJ has market power, he decides he can set his price at $60. What does this do to his profit?

e.Suppose the state legislature is concerned about the high price of local aromatic hops and sets a

maximum price at $40. What is the Qd for the market at this price? How does this compare to the quantity Randy wants to sell? What is his economic profit at this price?