1 . 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 total cost (ATC), and demand (D) for beer in this market. PLEASE HELP ME Suppose that BYOB charges $2.00 per can. Your friend Kevin says that since BYOB is a monopoly with market power, it should charge a higher price of$2.25 per can because this will increase BYOB's profit.Complete the following table to determine whether Kevin is correct.PriceQuantity Demanded Total RevenueTotal CostProfit(Dollars per can)(Cans)(Dollars)(Dollars)(Dollars)2.002.25Given the earlier information, Kevincorrect in his assertion that BYOB should charge $2.25 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 thefollowing graph. Specifically, the technological innovation causes a decrease in average fixed costs, thereby lowering the ATC curve and moving the MCcurve. (?)4.003.50Monopoly Outcome3.002.50ProfitATC2.00Loss1.501.00MC0.50DMR0.51.01.52.02.53.03.54.0QUANTITY (Thousands of cans of beer)PRICE (Dollars per can)

Answered: Suppose that BYOB charges $2.00 per…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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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.

PLEASE HELP ME

Suppose that BYOB charges $2.00 per can. Your friend Kevin says that since BYOB is a monopoly with market power, it should charge a higher price of
$2.25 per can because this will increase BYOB's profit.
Complete the following table to determine whether Kevin is correct.
Price
Quantity Demanded Total Revenue
Total Cost
Profit
(Dollars per can)
(Cans)
(Dollars)
(Dollars)
(Dollars)
2.00
2.25
Given the earlier information, Kevin
correct in his assertion that BYOB should charge $2.25 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.

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

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

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