Eileen is an entrepreneur who has recently developed and begun selling a new zer

Question

Eileen is an entrepreneur who has recently developed and begun selling a new zero-calorie alcoholic beverage called botijola. There is no other drink like it on the market. Currently, Eileen is deciding how much to charge for each bottle. True or False: Despite the up-front R&D costs of developing botijola, if Eileen sells each bottle at a price that is greater than the marginal cost of the last bottle (P > MC), it is possible for her to earn positive economic profits. True False Eileen has determined that her customers fall into two categories: consumers aged 21-35 and consumers aged 36-50. The demand and marginal revenue (MR) curves for these two categories of customers are depicted in the following graph, along with Eileen's marginal cost (MC) of producing botijola, which is the same for both groups. Use the graph to answer the questions that follow

Explanation / Answer

True: bcoz if price > MC, & a single seller exist then it's case of monopoly.

For ages between 36-50, MR & MC curves cut at Q= 3, corresponding price on Demand curve is $ 5

For ages 21-35, the two curve meet at Q= 4, so corresponding profit maximization price = $6

Since different price are charged for different groups, thus it's a discriminatory pricing policy

True

The new entry of entrepreneurs will drive price = MC ($2), so that total revenue covers all costs except R&D costs

Result is Normal (zero) economic profit.

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