Larry, Curly, and Moe run the only saloon in town. Larry wants to sell as many drinks as possible without losing money. Curly wa
nts the saloon to bring in as much revenue as possible. Moe wants to make the largest possible profits. Using a single diagram of the saloon’s demand curve and its cost curves, show the price and quantity combinations favored by each of the three partners. Explain.
Answer:In this case, Larry wants to sell as many drinks as possible without losing money. Thus, he wants to set quantity where price (demand) equals average.
