As in Worked-Out Problem 17.2 (page 599), Kalamazoo Competition-Free Concrete (KCC) is a local monopolist of ready-mix concrete. Its annual demand function is
Quantity Demanded= 26000-200P
Where P is the price, in dollars, of a cubic yard of concrete and Q is the number of cubic yards sold per year. Suppose that Kalamazoo's marginal cost is $20 per cubic yard and its avoidable fixed cost is $100,000 per year.
a. what is its profit-maximizing sales quantity
b. What would Kalamazoo's profit-maximizing sales quantity be if it had an avoidable fixed cost of $500,000 a year?
c. What if that fixed cost were instead sunk?