This is one questions with three parts

1) I expect to need four turkeys to feed my 20 Thanksgiving guests. However, spiking the eggnog (adding alcohol) with bourbon will induce my Thanksgiving guests to eat 25% less turkey. Turkeys cost $30 each, and the bourbon needed costs $20. How much money do I save if I spike the eggnog?

A. $0

B. $10

C. $30


2) How cheap would turkeys have to be (per turkey) for me to not have the incentive to spike the eggnog?

A. free

B. $10

C. $15

D. $20

3)A monopoly retailer makes a 50% margin on the $30 turkeys. Is there a price for the bourbon that the retailer can set (for the amount of bourbon needed to spike the turkeys) such that I will purchase the bourbon and the retailer will want to sell it, if the wholesale price of the bourbon is $10? (Assume the only added value from spiking the eggnog is from the reduced cost of turkey and that this type of bourbon is only used to spike eggnog).



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