Jackie, Jerry, and Johnny run the only saloon in town.Jackie wants to sell as many drinks as possible without losing money.Jerry wants the saloon to bring in as much revenue as possible.Johnny wants to make the largest possible profits.Examine the monopoly diagram below that contains the demand, marginal revenue and cost curves of the saloon. Determine the price-quantity combination that fits each owner's preference and explain the reason behind each of them

Jackie wants to maximize sales without losing money, i.e., as long as price is higher than or equal to average total cost (ATC). Before quantity is 35 units, the price (which is measured on the demand curve) is above the average total cost and the firm earns profit. When the quantity is 35 units, price on the demand curve is equal to the average total cost, since the demand curve intersects the ATC curve.Therefore, Jackie would sell 35 units at a price of 6.50 per unit.

Jerry wants to sell that output which maximizes revenue. Before quantity is 30 units, the marginal revenue is positive and hence, an increase in quantity increases total revenue. When the quantity is 30 units, marginal revenue is zero and hence total revenue does not changes. If quantity increases further, totalrevenue reduces since marginal revenue becomes negative. Thus, total revenue is maximum at quantity 30 units where the price on the demand curve is 7.50 per unit.Therefore, Jerry would sell 30 units at a price of 7.50 per unit.

Johnny wants to maximize profit. The profit is maximum at that quantity where marginal revenue is equal to the marginal cost. At quantity 25 units, the MR curve intersects the MC curve and hence, the profit is maximum. At this quantity, the price on the demand curve is 10 per unit.Therefore, Johnny would sell 25 units at a price of 10 per unit.

10 150 25 3035 60 Jackie would sell 35 units at a price of 6.50 per unit. Jen},t would sell 3%] units at a price of 150 per unit. Johnny would sell 25 units at a price of 1%] per unit