1 . 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.

Monopoly Outcome

Profit

Loss

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.00

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0

PRICE (Dollars per can)

QUANTITY (Thousands of cans of beer)

D

MR

MC

ATC

Suppose that BYOB charges $2.50 per can. Your friend Kevin says that since BYOB is a monopoly with market power, it should charge a higher price of $3.00 per can because this will increase BYOB's profit.

Complete the following table to determine whether Kevin is correct.

PriceQuantity DemandedTotal RevenueTotal CostProfit(Dollars per can)(Cans)(Dollars)(Dollars)(Dollars)2.50 3.00

Given the earlier information, Kevin correct in his assertion that BYOB should charge $3.00 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.

Place the black point (plus symbol) on the following 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 the loss.

BYOB is a monopolit in beer production and distribution in the imaginary economy of Hapeville. Suppose that BYOB cannot price discriminate; that is, it sells its besir at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue [MR), average total cool [ATC), and demand (D) for beer in this market. Place what black pount (plus symbol) on the graph to indicate what profit-maxiwhining price and quartey for BYOB. If BYOB is making a profit, won the grain nictangle (Inangle spotbois) to shade in the area meprisonting its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (ahamood symbol ) to shade in the anda representing is loss. 3:50 Monopoly Outcome 3100 Profit PRICE (Dolars par cal 1:50 1.00 Supportin that BYOB charges $2.50 per can. Your friend Kevin says that since BYOB is a monopoly with market power, it should charge a higher price of $3.00 per can because this will increase BYOB's profit. Complete tha following late to determine whather Kevin is correct. Price Quantity Demanded Total Revenue Total Cost Profit (DoNara pur can) (Cans) (Dollars) (Dollars) 2.50 3.00 Given the earlier information, Kimvin 7 correct in his assertion that BYOB should charge $3.00 pir can. Supperin that a bechnological in was BYDB's costs so that it now faces the marginal cost (MC) and average total cast. (ATC) given on the following graph. Specifically, tha tach case in average fixed costs, thentry lowering the ATC curve and moving the MC curvst. Pace what black point (plus symbol) on that following graph to indicate that profit-maximizing price and quantity for BY08. If Bros is making a profit, wat thi gniew rectangle (Triangle symbols) to shade in the anda representing it's profit. On the other hand, if BY08 is suffering a loss, use the purple rectangle {diamond symbols) to shade in the anda representing the loss. Monopoly Outcome 3.00 Profit PRICE (Dolars par unill 1.50 QUANTITY (Thousands of care of bear)