Question: 2. You decide to open a lemonade stand outside your dorm on a hot summer day. You know the distribution of reservation prices for the

2. You decide to open a lemonade stand outside your dorm

2. You decide to open a lemonade stand outside your dorm on a hot summer day. You know the distribution of reservation prices for the people who will walk by your stand each day (given in the table below). Each cup of lemonade costs you 30 cents to produce and you have no fixed costs. Person Reservation Price 1. 10 1.00 90 80 70 60 50 40 30 20 a. You set a fixed price for all customers. Calculate the marginal revenue of selling each additional cup of lemonade b. What is your profit maximizing price? (In case of a tie, choose the lower price.) c. At the profit maximizing price, what are profit and consumer surplus? d. What price should you charge to maximize total economic surplus? (In case of a tie, choose the lower price. ) e. How could you use price discrimination to increase your profits? If you use perfect price discrimination, how does profit compare to total economic surplus

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