A horse walks into a bar. The bartender says, "Why the long face?" The horse says, "I am willing to buy as much beer as you will sell me, but I am only willing to pay $3 for it."1 The bartender has a total cost curve of T C(q) = q^2 - q.
a) What is the Bartender's marginal and marginal cost?
b) How many beers will the bartender sell the horse?
c) Suppose the bartender also incurs a non-sunk fixed cost of $9 (electricity) if he chooses to open the bar. Would he choose to open if the horse is his only customer? Explain.