Segway Corporation has a monopoly on its personal transporter, ...

[Chelseaamend]

Segway Corporation has a monopoly on its personal transporter, which is a scooter that carries one person. The company achieved its monopoly through the procurement of a patent. In spite of this advantage it has yet to turn a profit.
 
  One major impediment for the product is the existence of local ordinance around the country that prohibits the use of motorized scooters on sidewalks where the Segway might otherwise provide great utility to users. Where do you believe the demand curve is in relation to the average total cost? What do you believe the company's executives are banking on since they continue to stay in business even in the face of losses?

Question 2

Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-color pinstriping job is 35, and she charges 95 for this service.
 
  For a total price of 175, Allison will apply a fancier 3-color pinstripe application to an automobile, a service that adds an additional 40 to the total cost of the package. Should Allison continue to offer the 3-color pinstripe application?
  A) No, her marginal benefit is less than her marginal cost.
  B) Yes, she still makes a profit by selling the 3-color application.
  C) yes, but only if she lowers the price of the 1-color application
  D) More information is needed for Allison to make this decision.

[joanwhite]

Answer to Question 1

The demand curve clearly lies everywhere below the average total cost curve. The company's executives are probably banking on pushing the demand curve upward through advertising and marketing. They should probably be spending lobbying effort to convince local authorities to amend their ordinances. This could help with demand as well.

Answer to Question 2

B