## <!-- -->To run this page correctly, you need a more modern browser that understands JavaScript.<P><!--Beginning of JavaScript function checkanswer() { //var f=document.question; r=0;r1=0; r2=0;r3=0; if (f.ann.selectedIndex==4){f.A.src=imaged[2].src;} else {f.A.src=imaged[3].src;r=1} if (f.cs3.value==45.){f.B.src=imaged[2].src; } else {f.B.src=imaged[3].src;r3=1} if (f.cs1.value==29.){f.C.src=imaged[2].src; } else {f.C.src=imaged[3].src; r2=1} if (f.cs2.value==16) {f.E.src=imaged[2].src; } else {f.E.src=imaged[3].src; r1=1} a1="Very good." if (r1==1) a1="Nancy gets \$8 of producer surplus from the first (\$15-\$7), \$5 for the second (\$15-10), and \$3 for the third (\$15-12). What is the total?"; if (r2==1) a1="To get total cost, add up 7 plus 10 plus 12."; if (r3==1) a1="The total revenue will be the price multiplied by the number she sells."; if (r==1) a1="Keep trying. You need to figure out how many batches she will sell before you can compute the other numbers."; f.comment.value=a1; } //-End of JavaScript- --> Nancy is willing to bake one batch of cookies per day if she can sell it for at least \$7. She can make these cookies at a time when she has little else to do. To make a second batch per day, she has to give up dusting her house, which is mildly important to her, so she will not bake the second batch unless she gets at least \$10. To bake a third batch, she would have to give up some phone calls to friends, so she will not bake a third batch unless she can sell it for at least \$12. Finally, to bake a fourth batch, she would have to stop watching a soap opera, so she would not bake it unless she can sell it for at least \$20. Suppose that she finds she can sell cookies at \$15 per batch. a) How many batches will she sell? ?? 0 1 2 3 4 b) What will her total revenue from sales be? \$ (Do not enter a \$ sign.) c) What is her total cost? \$ (Hint: the problem is giving you her marginal cost.) d) What is her producer surplus? \$ (In this case, it is also her profit because she owns all the resources.)

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