Well, your report received a luke-warm reception. The CEO of Stoll's Pasty Farms expressed concern about several things. Uncle Tolvo's pasty crop was unique as his plants and soil structure were "one of a kind" and no one else could duplicate the quality of his pasty harvest. Given this fact, Stoll's Pasty Farm feels they can capture 1/10th of the pasty market through unique differentiation of their product.
- Using information from question 1, what is the formula for the MR curve of Stoll's Pasty Farms?
- Explain how this information can be used in determining the firm's profit maximizing output in the short run?
- How might this situation change in the long-run?
[NOTE: Use an economic diagram to illustrate your answer to parts "b" and "c" and then explain your diagram in a manner that would make sense to your grandmother.]