QUESTION 10 20 points Save Answer For the next year, Trojan TP is planning to expand its toilet paper business beyond the West Coast to the Southwest. Marko, the Chief Operating Officer, used all the tools he learned at business school to estimate Trojan TP's demand for toilet paper in the Southwest. He estimates that the number of sales (in tons) that Trojan TP would make if their price was p (per ton), is equal to D(p) = 10,000-20p. The cost to produce one ton of toilet paper is equal to $30. Note that the demand function and the marginal cost stay the same throughout the problem. To meet this new demand, they are considering three investments to grow their plant by comparing total profit for each option. Option 1: Lease for $500,000, a state-of-the-art factory that would allow them to produce 6000 tons of toilet paper in a year. a. (9 points) What is the optimal price and the optimal total profit if Trojan TP goes with this option? Option 2: Spend $600,000 on a startup that will not only take care of production and ensure that capacity is unlimited, but also would help them identify all the firms that are willing to pay a price of $300 per ton as well as all the firms who are only willing to pay $150 per ton (but not $300 per ton). b. (5 points) What is the total profit if Trojan TP goes with Option #2 (Remember the cost of producing one ton of toilet paper is equal to $30)? Option 3: Mahek and Ashton are entrepreneurs who have been growing a TP manufacturing plant, and are offering the COO, Marko, a great deal of $450,000 per year to manufacture toilet paper. Unfortunately, this is a risky option. There is a 70% chance they can produce unlimited amounts of toilet paper, but a 30% chance their plant experiences breakdowns in which case they can only produce 4000 tons of toilet paper in a year. C. (4 points) What is the optimal price (assuming you still want to maximize profit) and the corresponding revenue if the production capacity is 4000 tons? (Note: if you can leverage work already shown above, you do not need to re-show the same work.) d. (5 points) What is their (expected) total profit if they go with Option #3