Homework(Ch 15)4. Profit maximization and loss minimizationBYOB 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 totalcost (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 thegreen 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.PRICE (Dollars per can)4.003.503.002.502.001.501.000.500MC00.5ATC1.5MR1.02.0 2.5 3.0QUANTITY (Thousands of cans of beer)3.54.0+Monopoly OutcomeOLProfitLossaI'n Price(Dollars per can)2.75Given the earlier information, CarlosPRICE (Dolars per unit)4.003.503.002.502.00Suppose that a technological innovation decreases BYOB's costs so that it now faces the marginal cost (MC) and average total cost (ATC) given on thefollowing graph. Specifically, the technological innovation causes a decrease in average fixed costs, thereby lowering the ATC curve and moving the MCcurve.1.503.00Place 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 purplerectangle (diamond symbols) to shade in the area representing the loss.1.000.500Quantity DemandedMC(Cans)005Total RevenueATC15(Dollars)MRcorrect in his assertion that BYOB should charge $3.00 per can.25 30201.0QUANTITY (Thousands of cars of beer)Total Cost(Dollars)45D4.0Profit(Dollars)+00Manapaly OutcomeProfitLoss?

Firms enter the business to procure a profit. Nonetheless, how much profit procured by the firm…

4. 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. per can) PRICE (Dollars per 4.00 3.50 3.00 2.50 2.00 1.50 1.00 + 0.50 MC 0 0 0.5 ATC MR 1.0 1.5 2.0 2.5 3.0 QUANTITY (Thousands of cans of beer) 3.5 D 4.0 Monopoly Outcome Profit Loss

4. 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. per can) PRICE (Dollars per 4.00 3.50 3.00 2.50 2.00 1.50 1.00 + 0.50 MC 0 0 0.5 ATC MR 1.0 1.5 2.0 2.5 3.0 QUANTITY (Thousands of cans of beer) 3.5 D 4.0 Monopoly Outcome Profit Loss

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 22 A monopolistically competitive market is like a monopoly in that both market structures feature easy entry by new firms in the long run. the main objective of firms in both market structures is something other than profit maximization. firms in both market structures produce the welfare-maximizing level of output. firms in both market structures set price above marginal cost. 1 Question 23 A monopolistically competitive market is like a competitive market in that
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