4. Profit maximization and loss minimization Lagatt Green is a monopoly beer producer and distributor operating in the hypothetical economy of Lightington. Assume that Lagatt Green is not able price discriminate, and so it sells its bear to all customers at the same price per bottle. The following graph gives the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) curves that Lagatt Green faces for beer in Lightington. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for Lagatt Green. If Lagatt Green is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if Lagatt Green is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. PRICE (Dollars per bottle) 1.50 2.50 2.00 0.50 0 0 MC 1.5 ATC MR 1.0 20 25 QUANTITY (Thousands of bottles of beer) D Given the earlier information, Jeremish Complete the following table to determine whether Jeremiah is correct. Price (Dollars per bottle) Quantity Demanded (Cans) 2.50 3.00 Monopoly Outcome Suppose Lagatt Green charges $2.50 per bottle. Your study partner Jeremiah says that because Lagatt Green is a monopoly with market power, it should charge the higher price of $3.00 per bottle in order to increase its profit. Total Revenue (Dollars) Profit LOSS Total Cost (Dollars) Profit (Dollars) correct in his assertion that Lagatt Green should charge $3.00 per bottle. Suppose that a technological innovation decreases Lagatt Green'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 Lagatt Green. If Lagatt Green is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if Lagatt Granin suffering in the multemal (diamond pumbair) to chade in the action the iner

Question Three A. A Monopolist producing and supplying cooking gas to Mombasa city faces the demand function. Q= 8800 – 20P. Its cost function is given by TC = 20Q + 0.05Q2 .i. Determine the quantity of cooking gas she will produce and the price she will charge to maximize profits and determine her profit. ii. Explain how her profits will be affected if regulators forced her to operate like a perfectly competitive firm. iii. Illustrate and compute deadweight loss and lost consumer surplus associated with her Monopoly operations. B. Kenya's minimum wage is Kshs 850 per hour. Imagine you are a policy maker and you must vote whether it be raised, lowered, or abolished. What will you decide? Why? Show how your decision will look when graphed.

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

1. Profit maximization and loss minimization Lagatt Green is a monopoly beer producer and distributor operating in the hypothetical economy of Lightington. Assume that Lagatt Green is not able price discriminate, and so it sells its beer to all customers at the same price per bottle. The following graph gives the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) curves that Lagatt Green faces for beer in Lightington. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for Lagatt Green. If Lagatt Green is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if Lagatt Green is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. 4.00 3.00 2.50 ATC 2.00 X 1.50 1.00 MC 0.00 MR 0 PRICE (Dollars per un Price (Dollars per bottle) 2.00 2.25 Given the earlier information, Jabrill 4.00 3.50…

Peter operates an ice cream shop in the center of Fairfield. He sells several unusual flavors of organic, homemade ice cream so he has a monopoly over his own ice cream, though he competes with many other firms selling ice cream in Fairfield for the same customers. Peter’s demand and cost values for sales per day are given in the table below. (Everyone who purchases Peter’s ice cream buys a double scoop cone because it’s so delicious.) 3. Refer to Narrative 16-1. How many ice cream cones should Peter sell in one day to maximize his profits? 4. Refer to Narrative 16-1. What price should Peter charge to maximize his profits? 5. Refer to Narrative 16-1. When Peter maximizes his profits, how much revenue does he earn per day?

Lagatt Green is a monopoly beer producer and distributor operating in the hypothetical economy of Lightington. Assume that Lagatt Green is not able price discriminate and so it sells its beer to all customers at the same price per bottle. The following graph gives the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) curves that Lagatt Green faces for beer in Lightington. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for Lagatt Green. If Lagatt Green is making a profit use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if Lagatt Green is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss PRICE (Dolan per bottle) 400 2.50 2.00 1.50 1.00 050 0 MC 0 ATC AR D 35 QUANTITY(Tands of botes of beer) = Monopoly Outcome Profe Loss

33) Kate's Great Crete (KGC) is a local monopolist of ready-mix concrete. Its annual demand function is Q=20,000 - 400P, where P is the price, in dollars, of a cubic yard of concrete and Q is the number of cubic yards sold per year. What is the difference between price and marginal revenue when KGC sells 5,000 cubic years of concrete per year? A) $12.50 B) $25.00 C) $37.50 D) $50.00

2. The demand and total cost functions for a monopoly firm are: Q(P) 20-0.5P TC(Q)=4-Q+0.5 Q² a) Derive the profit maximising Q₁, P, and compute the firm's profit p 'M' M b) Suppose instead a competitive industry where the MC curve is the competitive industry's supply function. Derive the competitive industry equilibrium P* and Q*. c) Drawing on a) and b), use a diagram and algebra to compare the monopoly industry and the perfectly- competitive industry outcomes in terms of a. equilibrium prices and quantities, b. economic efficiency (total economic surplus), and c. distribution in terms of consumer surplus and producer surplus

The following diagram illustrates the demand curve facing a monopoly in an industry with no economies or diseconomies of scale and no fixed costs. In the short and long run, MC = ATC. 1.) Using the point drawing tool, indicate the monopoly output and monopoly price (Monopoly) in the figure to the right. Attach the appropriate provided label. 2.) Using the rectangle drawing tool, shade in monopoly profits (Profit). Attach the appropriate provided label. 3.) Using the triangle drawing tool, shade in the "excess burden" or "welfare costs" of the monopoly (Excess burden). Attach the appropriate provided label. Note: Carefully follow the instructions above and only draw the required objects. The monopoly creates excess burden because O A. it produces where price equals marginal cost. B. it produces an inefficiently large amount of output. O C. it charges a price that is too low. D. it produces where marginal cost is positive. E. it produces where price is above marginal cost. MR Output, Q…

The following diagram illustrates the demand curve facing a monopoly in an industry with no economies or diseconomies of scale and no fixed costs. In the short and long run, MC = ATC. 1.) Using the point drawing tool, indicate the monopoly output and monopoly price (Monopoly) in the figure to the right. Attach the appropriate provided label. 2.) Using the rectangle drawing tool, shade in monopoly profits (Profit). Attach the appropriate provided label. 3.) Using the triangle drawing tool, shade in the "excess burden" or "welfare costs" of the monopoly (Excess burden). Attach the appropriate provided label. Note: Carefully follow the instructions above and only draw the required objects. The monopoly creates excess burden because A. it produces where marginal cost is positive. B. it produces where price equals marginal cost. OC. it produces an inefficiently large amount of output. D. it produces where price is above marginal cost. E. it charges a price that is too low. Click the graph,…