1} Elixir Spring produces a unique and highly prized mineral water. The firm's total fixed cost is $5,000 a day, and its marginal cost is zero. The table shows the demand schedule for Elixir water. Quantity (bottles per day) a) What are Elixir's prot-maximizing price and output? Explain briefly. b) Calculate the economic profit. Show your workings Suggested explanation: a) Elixir produces the quantity at which the - - Marginal marginal cost equals marginal revenue. In this Revenue case, it is equal to zero. Thus, Elixir produces 6,000 bottles a day and sets a price of 54 a bottle because that is the price at which 6,000 bottles a day is the quantity demanded. \"mus. I0000 '- - 24000 b) Elixir's economic prot: Total Revenue - Total Fixed Cost- Total Variable Cost = $24,000 - 55,000 - 0 = $19,000 (Since marginal cost is zero, the total variable cost is also equal to zero as marginal cost comes from variable cost.)