Y7

Suppose a seller is selling cups of yogurt. Every consumer has a demand function of q = 12 p. The marginal cost of producing one cup is 2. Imagine that the firm adopts a linear pricing policy that sets a uniform price per cup p, but requires that a consumer should buy at least qmin cups. Assume if a consumer is indifferent between buying or not buying, the consumer buys.1-1) What is the largest social surplus of serving one consumer?1-2) What is the highest price a firm could charge so that a consumer is willing to buy qmin amount? 1-3) At the price calculated in 2), will the consumer buy q qmin?1-4) What is a firm profit maximization problem given qmin?1-5) What is the optimal qmin that maximizes the firm's profit?1-6) Does the solution in 5) maximize social surplus?