Duck Donuts sells plain and premium donuts.  Premium donuts are plain donuts with special toppings. Demand for plain (PL) donuts is:   PPL = 3 - 0.2QPL and Demand for premium (PR) donuts is: PPR = 4.4 - 0.4QPR The marginal cost for each is: MCPL = 0.20 MCPR = 0.40 Which of the following statements is true? a.Plain donuts generate more Total Revenue than premium donuts b.More premium donuts will sell than plain donuts c.Only premium donuts should be sold d.Only plain donuts should be sold e.Premium donuts generate more Total Profit than plain donuts

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter23: Price-searcher Markets With Low Entry Barriers
Section: Chapter Questions
Problem 17CQ
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Duck Donuts sells plain and premium donuts.  Premium donuts are plain donuts with special toppings.

Demand for plain (PL) donuts is:   PPL = 3 - 0.2QPL

and Demand for premium (PR) donuts is: PPR = 4.4 - 0.4QPR

The marginal cost for each is:

MCPL = 0.20

MCPR = 0.40

Which of the following statements is true?


a.Plain donuts generate more Total Revenue than premium donuts
b.More premium donuts will sell than plain donuts
c.Only premium donuts should be sold
d.Only plain donuts should be sold
e.Premium donuts generate more Total Profit than plain donuts
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