You are a manager at Boston Brew'ns, the official microbrewery of the Boston Bruins. Applying what you learned at Cal State East Bay prior to moving to the east coast, you have estimated the cost function for brewing beer to be c(Q)=2+Q+1/50Q2 . Further, you have estimated the elasticity of demand for your signature beer, finding it to be =-1.5. Your firm has some price setting power because you and the other breweries in town offer differentiated products.

The firm is currently charging a price of $6 per beer and selling 100 beers. Is this a profit-maximizing price? Explain. Should you increase or decrease the markup? Explain.

(Note: Please do the work for this problem with paper and pencil and submit it through the upload link provided once the exam has been completed.)