Question

Question 17 10 pts I drew this graph on our last meeting. Here is the numerical problem. Suppose Budweiser is a monopoly and has only one retailer, Bud's Bar, an independent company. The demand for a keg of beer is P = 100 - Q. Budweiser's MC = AC = $2. a. If Budweiser was a profit maximizing monopoly, what price would it charge Bud's Bar? Show your work. b. If Budweiser's price is is the average cost and the marginal cost of Bud's Bar, what quantity would Bud's Bar purchase if it acts as a single price monopoly? (5 points) C. Give the quantity that Bud's Bar will purchase, calculate the profit of Budweiser

Answer 1

Y Question 17 P=100-Q Û MC= AC=$2. a) If Budweiser is frofit maximizing monofoly, thern M. R = MC. so P - 100.-Q., also inflies = 100-P . TR= P Q. =P ( 100-P) TR 700 P-p2 SO MR = DTR 100-2P MC = $2. so 100-2 P = $2.. - 2 P = 98 P= 98 Z. 1p = $497 . So it will charge $49 - b) Nowe if P = A·C = MC, then Too From 700-0=42 To=98 units So Bud Bar will lur chase 98 units

2 AS Q-98 units and l= $2. Total Reusme - TR = PxQ. = =9882 ____ 196 AE=a. - TC= AC XA. TC= 2x98 T(= 196 Profit= TR-TC 1196-19-6 So, they will kam zero profit