Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. IF BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit

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Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. IF BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit

4. Profit maximization and loss minimization

BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for beer in this market.

Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. IF BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss.

Suppose that BYOB charges $2.00 per can. Your friend Van says that since BYOB is a monopoly with market power, it should charge a higher price of $2.25 per can because this will increase BYOB's profit.

Complete the following table to determine whether Van is correct.

Given the earlier information, Van _______ correct in his assertion that BYOB should charge $2.25 per can.

Suppose that a technological innovation decreases BYOB's costs so that it now faces the marginal cost (MC) and average total cost (ATC) given on the following graph. Specifically, the technological innovation causes a decrease in average fixed costs, thereby lowering the ATC curve and moving the MC curve.

business economics

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Answer 1

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Answer #1

(1) Monopoly outcome is at intersection of MR and MC curves with price $2.0 and output 1,000. At this output, ATC is higher than price ($2.75 > $2), hence BYOB incurs loss.

(2)

Working Notes:

Total revenue (TR) = Price (P) x Quantity (Q)
Total Cost (TC) = ATC x Q
Profit = TR - TC

P	Q	TR	ATC	TC	PROFIT
2	1,000	2,000	2.75	2,750	- 750
2.25	750	1687.5	3.25	2,437.5	-750

(3) Van is not correct (because loss is the same even with higher price).

(4) After technological innovation, MR = MC when P = $1.75, Q = 1,250 and ATC = $1.5. Since P > ATC, BYOB is making a profit as shown.

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Answer 2

Answer #2

source: Cengage

answered by: anonymous

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Answer 3

Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. IF BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit

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Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity for BYOB.

BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate;

BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville.

BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville.

BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate;

3. Profit maximization and loss minimization BYOB is a monopolist in beer production and distribution in...

BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville.

BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville.

BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville

Where does profit and loss go for each graph, I also want to make sure my...

Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. IF BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit

Homework Answers

Add Answer to: Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. IF BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit

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Add Answer to:
Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. IF BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit