4. Francois owns a motel and monopolizes motel rooms along a remote stretch of south Texas highway. In March, Francois stayed open even though he earned negative economic profits. a. Draw a correctly and thoroughly labeled graph for Francois' motel during March and include each of the following: i. The profit-maximizing quantity and price, labeled QF and PF ii. The average total cost curve, labeled ATC iii. The rectangle indicating the negative economic profit, lightly shaded. b. What explains explains why Francois continued operating during March even though he was earning negative economic profits? C. In April, the fixed costs for Francois' motel decrease. Would Francois' profit-maximizing quantity increase, decrease, or stay the same in April? Explain.
4. Francois owns a motel and monopolizes motel rooms along a remote stretch of south Texas highway. In March, Francois stayed open even though he earned negative economic profits. a. Draw a correctly and thoroughly labeled graph for Francois' motel during March and include each of the following: i. The profit-maximizing quantity and price, labeled QF and PF ii. The average total cost curve, labeled ATC iii. The rectangle indicating the negative economic profit, lightly shaded. b. What explains explains why Francois continued operating during March even though he was earning negative economic profits? C. In April, the fixed costs for Francois' motel decrease. Would Francois' profit-maximizing quantity increase, decrease, or stay the same in April? Explain.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:4. Francois owns a motel and monopolizes motel rooms along a remote stretch of south Texas
highway. In March, Francois stayed open even though he earned negative economic profits.
a. Draw a correctly and thoroughly labeled graph for Francois' motel during March and
include each of the following:
i. The profit-maximizing quantity and price, labeled QF and PF
ii. The average total cost curve, labeled ATC
iii. The rectangle indicating the negative economic profit, lightly shaded.
b. What explains explains why Francois continued operating during March even though he
was earning negative economic profits?
c. In April, the fixed costs for Francois' motel decrease. Would Francois' profit-maximizing
quantity increase, decrease, or stay the same in April? Explain.
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