Question: In the Pete s Pipes example discussed in the class, the fixed cost was $ 1 0 K and variable cost was $ 1 .

In the Petes Pipes example discussed in the class, the fixed cost was $10K and variable cost was $1.5 per unit. The demand curve was given by Q =25-5P. The optimal price obtained by running Solver was $3.25 and their profit was about $5310. Petes Pipes finds out that their fixed cost is going to go down from $10K to $7K. Without running Solver, Petes Pipes determines that this is the new Profit.

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