Question

Complete the following table to determine whether Van is correct. Price (Dollars per can) 2.50 3.00 Quantity Demanded (Cans) Total Revenue Total Cost Profit (Dollars) (Dollars) (Dollars) Given the earlier information, Van ▼ correct in his assertion that BYOB should charge $3.00 per can Imagine 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 Place the black point (plus symbol) on the following graph to indicate the profit-maximising 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 the loss 3.50 Monopoly Outcome 3.00 2.50 Profit 2.00 TC Loss 1.50 Cr 1.00 0.50 MR 0.5 1.0 152.0 253.0 3.54.0 QUANTITY (Thousands of cans of beer)

Answer 1

(1) Previous graph is required but missing, so the tables cannot be filled in.

(2) The monopolist maximizes profit or minimizes losses by equating MR with MC. From the given graph, when MR intersects MC, Quantity = 1750, Price = $2.25 and ATC = $1.75. Since Price > ATC, there is a profit shaded as follows.