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Jelly Welly Candy is a boutique company that produces and sells a distinctive kind of jellybeans...

Jelly Welly Candy is a boutique company that produces and sells a distinctive kind of jellybeans with high quality, unusual flavors. Suppose Jelly Welly candies has a demand curve: P = 20 - .01Q, where Q denotes the pounds of Jelly Welly candies demanded per week at various prices per pound.

  1. (6 points) For price elasticity, identify the elastic range of demand, the unit elastic range of demand, and the inelastic range of demand for Jelly Welly. Include a graph of the demand curve, and make sure to indicate the numerical values of price and quantity axis intercepts, as well as the coordinates of any important price / quantity points.
  2. (8 points) What price maximizes total revenue for Jelly Welly? How many pounds of Jelly Welly candy will customers demand at this price? What is the marginal revenue at this volume?
  3. (6 points) Will this price also maximize total profit? Explain why or why not using marginal analysis. State any assumptions you make.

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