Question 2 You own and operate a fruit stand. Your demand curve is given by P...
Question 2
You own and operate a fruit stand. Your demand curve is given by P
= 0.5 - 0.002Q, where P is in dollars and Q is in pounds of fruit.
Your marginal cost curve is MC = 0.006Q. Your fixed costs equal
$10.
(a) Use a graph to show your demand and marginal cost curves. (5
marks)
(b) Use the demand curve to derive the marginal revenue curve and
show it on your graph.
(5 marks)
(c) Calculate the profit maximising price and quantity, and
identify them on your graph.
(5 marks)
(d) Calculate your profit.
(5 marks)
(e) Calculate consumer surplus at the profit maximising P and
Q.
(5 marks)
Homework Answers
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Question 2
You own and operate a fruit stand. Your demand curve is given by P...
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