BYO6 is a monopolist in bear production and distribution in the imaginary econom

Question

BYO6 is a monopolist in bear production and distribution in the imaginary economy of Hopsville. Suppose that BYO6 cannot price discriminates 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 BYO6. If BYO6 is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if BYO6 is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss.

Explanation / Answer

1300 is the quantity produced (MR=MC) at corresponding price of 2.8 (Quantity intersecting Demand line). But the average total cost is 3.1. So company is making losses.

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