Ice-Cream Bar Equilibrium. Assume that you are running a small ice cream bar, selling luxury home-made ice cream. The market for ice-cream is characterized by monopolistic competition, and your...

Ice-Cream Bar Equilibrium. Assume that you are running a small ice cream bar, selling luxury home-made ice cream. The market for ice-cream is characterized by monopolistic competition, and your short-run demand function is given by P = 200 - 2Q. Your total cost function is given by TC = 300 + 20Q + Q2 , and your marginal cost function is given by MC = 20 + 2Q.

a. What will be your ice-cream bar’s profit-maximizing levels of price (P) and quantity (Q)?

b. Calculate your total profit.

c. If your fixed cost doubles, will you still make a profit?