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Samantha owns the only pie store in a small town. She has a marginal cost of $7 per pie. She aims to maximize profit and
Samantha owns the only pie store in a small town. She has a marginal cost of $7 per pie. She aims to maximize profit and is currently charging $38 per pie. Potential prices Samantha could charge with the corresponding quantities is outlined below:
$46/pie -> 50 pies
$42/pie -> 70 pies
$38/pie -> 84 pies
$34/pie -> 100 pies
$32/pie -> 108 pies
$30/pie -> 116 pies
Provide answers to the following questions based on the information above:
- Based on Samantha's current level of production of $38 per pie, what is her marginal revenue?
- Should Samantha increase or decrease output at the current production level to maximize profit?
- What price per pie should Samantha charge to maximize profit?
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