At the start of COVID-19 in March 2020, Gracie lost her job. When mask wearing became common across the country, she started making beaded necklaces to hook to the ear loops of a mask, so that you could hang the chain around your neck when you take off your mask.

She decided to start selling these to friends on Instagram with the goal of eventually setting up a little business of selling them on Etsy. She began selling on Instagram by asking people to pay what felt right to them. In a week, she sold 26 beaded chains – see the data from her sales in the attached Excel. Each person in the data bought 1 mask chain.

1) Using the Instagram sales data, graph the demand curve for this product.

Reminders: Always sort price (which is WTP) from high to low for the demand curve and marginal analysis

The demand curve has price on the y-axis and quantity on the x-axis

Think carefully about what “quantity” is here. Each person buys 1 mask chain. Let’s say we take a price of $10, how many people will have bought mask chains? Let’s say the price is $8, how many people will have bought mask chains? Etc.

2) Using the sales data, graph the revenue curve for this product

3) Using the sales data, graph the marginal revenue curve for this product

4) Gracie is living with her sister’s family and has no full-time job, so she could make an unlimited number of chains. She uses the beads from her niece’s old beading set. She is looking to maximize her profit. Because she is living with her sister rent free and using these beads they already had, there are no costs for Gracie to consider. What price should she charge for the beaded mask chains on Etsy given what she found through her Instagram sales? How many beaded masks chains will she sell at that price and what should she expect her revenue to be?

5) Gracie has realized she only has enough beads in her kit to make 10 chains! Would your recommendation for price change from your answer in (4)? If so, how & why?

6) Gracie’s niece is clever. The niece finds enough more beads for one more chain, so Gracie could make 11 not just 10 chains. But the niece wants compensation for this! What is the most Gracie would pay her niece to get beads to make an additional chain (the 11th chain)?

	Name	Paid
	Madison	$ 13.80
	Greg	$ 11.00
	John	$ 2.50
	Kath	$ 12.50
	Vince	$ 19.00
	Josh	$ 13.20
	Alex	$ 8.50
	Morgan	$ 10.20
	Jon	$ 9.70
	Arielle	$ 5.60
	Tim	$ 14.60
	Aditya	$ 12.20
	Chondi	$ 9.20
	Vana	$ 10.60
	Emily	$ 15.70
	Dylan	$ 5.00
	Martie	$ 3.30
	Doug	$ 11.40
	Nic	$ 7.70
	Nina	$ 17.00
	Will	$ 12.80
	Louis	$ 6.20
	Justin	$ 6.90
	Sheena	$ 4.50
	Swati	$ 4.00
	Shilpa	$ 11.80