BYOB is a monopolist in beer production and distribution In a small country. Sup

Question

BYOB is a monopolist in beer production and distribution In a small country. Suppose that BYOB cannot price discriminate. 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) In the market for beer. Place the grey point (star symbol) on the graph to Indicate the profit-maximizing price and quantity for BYOB. Drop lines will extend to both axes automatically. If BYOB Is making a profit, use the purple rectangle (diamond symbols) to shade in the area representing its profit. On the other hand, If BYOB is suffering an economic loss, use the red rectangle (cross symbols) to shade In the area representing its economic loss. Suppose that BYOB charges $2.75 per can. Your friend Ginny says that since BYOB is a monopoly with market power, it should charge a higher price of $3.00 per can. Ginny claims that BYOB would break even If it did this. Fill In the following table to determine whether Ginny is correct. Given the earlier information, Ginny correct in her assertion that BYOB should charge $3.00 per can.

Explanation / Answer

Answer to blank 1: was

P QD TR TC PROFIT 2.75 2000 5500 6000 -500 3.00 2000 6000 6000 0

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