The individual demand for a slice of pizza is given by QD = 6 - P. Assume the marginal cost of a slice of pizza is constant at $1.00 and the marginal revenue (MR) function is 6 - 2Q.
a. What is the profit-maximizing price and quantity if the seller sells all slices at a single price?
b. Suppose that the seller decides to sell pizza at cost and charge a fixed price for this option. What quantity will a customer demand at the market price? What is the maximum fixed price the seller can charge for this option? Discuss the value of this seller's pricing strategy.