In 2018, pop star Drake was downloaded twice as often as Cardi B. However, downloads for both these artists sold for the same price on Apple’s iTunes store. Does this suggest that Apple is failing to maximize profits? Use a picture or pictures to answer. You can make a reasonable assumption that the marginal cost to Apple of supplying a download is a constant $0.25.

Consider a price-searching firm, Sam’s Fire Engines, which sells fire engines in the fictional country of Pyrotania. Initially, Sam’s produced seven fire engines but then decided to increase production to eight fire engines. The following graph shows the demand curve the firm faces. To sell the additional engine, Sam’s must lower its price from $100,000 to $50,000 per engine. (Hint: Sam’s Fire Engines gains revenue from the additional engine it sells, but it also loses revenue from the initial seven engines because it sells them all at the lower price.) On the following graph, use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial seven engines by selling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000.

Asim's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Asim initially produced eight trucks, but then decided to increase production to nine trucks. The following graph gives the demand curve faced by Asim's HookNLadder. As the graph shows, in order to sell the additional fire truck, Asim must lower the price from $80,000 to $40,000 per truck. Notice that Asim gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial eight engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $40,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $40,000. PRICE (Thousands of dollars per fire engine) 220 Asim 200 180 160 140 120 100 80 60 40 20 0 0 1 True 2 False 4 5…

Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced five trucks, but then decided to increase production to six trucks. The following graph gives the demand curve faced by Jabari's HookNLadder. As the graph shows, in order to sell the additional fire truck, Jabari must lower the price from $160,000 to $120,000 per truck. Notice that Jabari gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial five engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial five engines by selling at $120,000 rather than $160,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $120,000. PRICE (Thousands of dollars per fire engine) 220 200 180 160 140 120 100 80 60 40 0 Jabari 0 + 1 True…