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1. Stanley Smith has a soft drink concession monopoly at Fort Tippecanoe, Indiana, County Fair. He believes his total cost for supplying the drinks will be
TC = 800 + 0.2Q + .0001Q^2
If the County Fair Board tells him he must charge $0.80 and demand for the drinks during the fair is given by the demand curve
Q = 5000 - 2500P
determine the following:
(aa) The number of drinks sold and Stanley's total profit at the fixed price of $0.80 per drink.
(bb) Stanley's profit-maximizing output, price, and profit if he were allowed to set his own price instead of having to charge $0.80.
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