Answer Happy

Question 4 Bunter' was asked the following question: Soylent Industries makes three kinds of wafers: Soylent Red, Soylent Yellow and their latest, William not Mervyn Page the far more flavorful and nutritions Soylent Green, which, stensibly is made from plankton Each kind of wafer has its own dedicated following and a consumer of one kind never considers purchasing a wafer of a different kind. The demand curve for each of these wafer products respectively are as follows: 1. Red: 4 = 100 - 2. Yellow: 4y = 75 - 3. Green ( = 140 - 2p Here pr is the unit price of Soylent Red. By is the unit price of Soylent Yellow and and pg is the unit price of Sovient Green, and are the corresponding quantities respectively. To produce q units of any of the kinds of wafers, requires 2q units of labor. The labor needed is not specialized, i... no wafer requires a specialized form of labor. The cost to Soykent of purchasing a units of labor is What is the profit maximizing mit price for each wafer that Soylent Industries should set? Here is his solution: The marginal revenues of each of the three kinds of walets are MR = 100 - 2, MR, - 75 - 2, MR = 140 - 4 As the cost of production satisfies decreasing returns to scale, profit is maximized when marginal revenue is equal to marginal cost. Marginal cost is 0.54. So we solve the following: 100-2p0.5(100) 75 -2,-0.5(75) 140 - 10,5(100-2) Therefore, and = Is Bunter's solution correct? If yes, is his justification complete? If not, what is the correct solution and what are all the mistakes Bunter has made?