Stacy's Cupcakery operates in a perfectly competitive market (among many other identical cupcake

producers), in which gourmet cupcakes sell for $5 each. Stacy's total cost each day (TC) and

marginal cost (MC) for each unit are

TC=80+0.05q2?

MC=0.1q?

A. Assume that Stacy has already paid her fixed costs today. Solve numerically for the number of

cupcakes that Stacy should produce if she wants to maximize short-run profit.

B. On the graph below, plot Stacy's marginal cost curve and (residual) demand curve. Make sure

to label all axes and curves, as well as the equilibrium price and quantity.