Jason is a teeth cleaner living in Cali

Jason is a teeth cleaner living in Cali. He faces the following demand curve for his product: (table provided in the image).

Jason has been told by his Aunt, who is currently taking a math class, that if he lowers his price, he will capture market share and increase total revenue and profit. All of his advisors within the company have assured Jason that her Aunts advise may be correct, BUT the above demand curve will not change. Assume that Jason knows the above demand curve will not change and is also considering his aunts advice. The prices can only change in the increments specified. The current price is $1.30.

A. If Jason is seeking to maximize total revenue, should he follow his aunts advice? Why? (Use midpoint formula of elasticity)

B. If Jasons cost structure at the above level of production is such the MC> ATC, what effect will this have on Profit (TR -TC,assume fixed costs are zero, but this is still in the short run)? Why?

C. Suppose that the current price is now $1.90, and this is the only change, does this change your answer to letter A? , if anything, is different?