The individual demand for a slice of pizza at Sam's Pizza is given by Q D =
Question:
The individual demand for a slice of pizza at Sam's Pizza is given by QD = 6 - P. Assume the marginal cost of a slice is constant at $1.00 and the marginal revenue (MR) function is 6 - 2Q.
a. What is the profit-maximizing price and quantity if Sam's sells all slices at a single price? What profit per customer will be earned?
b. Suppose that Sam's decides to sell pizza at cost and charge a fixed price for this option. What quantity will a customer demand at the market price? What is the maximum fixed price Sam's can charge for this option?
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a Q 6 P or P 6 Q MR 6 2Q MC AC 1 MR MC 6 2Q 1 Q 250 P 35...View the full answer
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