Question

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

a for profit maximization in Monopoly MCER Total Revenue = P x a (TR) TR - (100- 0x0 TR - lood-Q2 MR = dCTR) do - dC1ood -02) do 2100 - 20 MC = MR 100-202 2 20=98 la= ug

pa 100-a a 100-49 IP = $51 profit maximizing price 6). If pare - Ac). loo-Q = 2 [a= 98 Budwiser C). | propit & TR -Tc la here. TC = ACxQ = 20 - Propit = 100 Q- Q²-20 - - Q2 - 20 flood -0² 1980 When 10 = 98] = -(98)4498x98 Profit col