Problem
Fore! is a seller of golf balls that wants to increase its revenues by offering a quantity discount. For simplicity, assume that the firm sells to only one customer and that the demand for Fore!'s golf balls is P = 100 - Q. Its marginal cost is MC = 10. Suppose that Fore! sells the first block of Q1 golf balls at a price of P1 per unit.
a) Find the profit-maximizing quantity and price per unit for the second block if Q1 = 20 and P1 = 80.
b) Find the profit-maximizing quantity and price per unit for the second block if Q1 = 30 and P1 = 70.
c) Find the profit-maximizing quantity and price per unit for the second block if Q1 = 40 and P1 = 60.
d) Of the three options in parts (a) through (c), which block tariff maximizes Fore!'s total profits?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.