Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 15 - Part V - Monopoly - Problems and Applications - Page 325: 5

Answer

Please see the graph.

Work Step by Step

Larry wants to sell as many drinks as possible without losing money, so he will sell drinks until the average total cost curve and the demand curve intersect. (Larry's price and quantity are $P_{L}$ and $Q_{L}$, respectively.) Curly wants to make as much revenue as possible, so he will sell drinks until the marginal revenue is zero. (Curly's price and quantity are $P_{C}$ and $Q_{C}$, respectively.) Moe wants to make the largest possible profits, so he will sell drinks until the marginal revenue curve and marginal cost curve intersect. (Moe's price and quantity are $P_{M}$ and $Q_{M}$, respectively.)
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