Suppose that BYOB charges $2.75 per can. Your friend Musashi 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 Musashi is correct.| Price (Dollars per can) | Quantity Demanded (Cans) | Total Revenue (Dollars) | Total Cost (Dollars) | Profit (Dollars) ||-------------------------|---------------------------|--------------------------|------------------------|------------------|| 2.75 | | | | || 3.00 | | | | |Given the earlier information, Musashi ______ 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.*Graph Description:*- The graph has axes labeled with "PRICE (Dollars per unit)" and "QUANTITY (Thousands of cans of beer)".- The vertical axis (Price) ranges from $0.00 to $4.00.- The horizontal axis (Quantity) ranges from 0 to 4.0.- Curves on the graph: - MC (Marginal Cost) curve is sloping upwards. - ATC (Average Total Cost) curve is U-shaped, lying above the MC curve. - MR (Marginal Revenue) curve is downward-sloping, lying below the demand curve. - D (Demand) curve is downward-sloping.- Symbols on the graph: - Plus symbol indicates Monopoly Outcome. - Green triangle symbols indicate Profit. - Purple diamond symbols indicate Loss. **Monopoly Pricing in Hopsville**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.**Instructions:**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.**Graph Explanation:**- **Axes:** - The vertical axis represents the price in dollars per can. - The horizontal axis represents the quantity in thousands of cans of beer.- **Curves:** - **Demand (D):** Downward sloping blue line. - **Marginal Revenue (MR):** Downward sloping black line, below the demand curve. - **Marginal Cost (MC):** Upward sloping orange line. - **Average Total Cost (ATC):** U-shaped green curve.**Key Symbols:**- **Monopoly Outcome:** Black plus symbol indicating the equilibrium point.- **Profit Area:** Green rectangle with triangle symbols.- **Loss Area:** Purple rectangle with diamond symbols.

A firm maximizes profit by producing at MR =MC and charging the maximum price consumers are willing…

Suppose that BYOB charges $2.75 per can. Your friend Musashi 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 folowing table to determine whether Musashi is correct. Price Quantity Demanded Total Revenue Total Cost Profit (Dollars per can) (Cans) (Dollars) (Dollars) (Dollars) 2.75 3.00 Given the earlier information, Musashi 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 symbois) 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. 4.00 3.50 Monopoly Outoome 3.00 2.50 Profit 2.00 ATC Loss 1.50 1.00 0.50 MC MR 0.5 1.0 1.5 20 25 3.0 3.5 4.0 QUANTITY (Thousands of cans of beer) PRICE (Dollars per unit)

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC