and average variable cost.

b. At what price is the zero-profit point? At what price is the shutdown point?

c.

If the company sells the computers for $500, is it making a profit or a loss? How big is the profit or

loss? Sketch a graph with AC, MC, and AVC curves to illustrate your answer and show the profit or loss.

d.

If the firm sells the computers for $300, is it making a profit or a loss? How big is the profit or loss?

Sketch a graph with AC, MC, and AVC curves to illustrate your answer and show the profit or loss.
214 8 • Problems

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Monopoly

9

FIGURE 9.1 Political Power from a Cotton Monopoly In the mid-nineteenth century, the United States, specifically

the Southern states, had a near monopoly in the cotton that they supplied to Great Britain. These states attempted

to leverage this economic power into political power—trying to sway Great Britain to formally recognize the
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