Question: Tea Kandy (TK) is the only a bubble tea store in Ljubljana. The local demand for bubble tea is given by QD = 1200 -

Tea Kandy (TK) is the only a bubble tea store in Ljubljana. The local demand for bubble tea is given by QD = 1200 - 12P. TK's total cost is TC = Q2/12 - 40Q + 3000. (a) Suppose TK wants to maximise profits, what would be the price they would choose for a serving of bubble tea? Show your work. [4 marks] (b) The owners of TK decided they wanted to support drinking of bubble tea. How many serving of bubble tea would TK want to eliminate deadweight loss? [3 marks] (c) One of the employees at TK, who obtained an HD in ECON1001 a few years ago, proposed a third solution: setting a price such that revenue is maximised. Which was the price he proposed? [3 marks]

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