Plz answer the following frq IN DETAIL, especially for qurstions with "Explain" mark.
6. Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer. Use the graph provided below to answer parts (a)-(e).Marginal Cost Pnce, Cost (3} Average Total Cost Average Variable Cost Demand 0 11 28 40 56 74 Quantity Marginal Revenue CompAce, a prot-maximizing rm, has a patent on a computer accessory, making it the only producer of that computer accessory. The graph above shows CompAce's demand, marginal revenue, average total cost, average variable cost, and marginal cost curves. (a) Identify the quantity that maximizes CompAce's prot. Explain. (b) At the quantity identied in part (a), does CompAce earn a positive economic prot, a negative economic prot, or zero economic prot? Explain. (c) Calculate CompAce's total revenue if the rm produces the allocatively efcient quantity. Show your work. (d) At a price of $60, will CompAce continue to produce or will it shut down in the short run? Explain. (e) Assume that at '34 units, the average total cost is $62. Ifthe total rent paid by CompAce increases by $370, calculate the rm's new average total cost at that output. Show your work. Assume that CompAce's patent expires. ScanzAll, a company with the capability to produce the same computer accessory as CompAce, intends to enter the market and charge a lower price than CompAce for the computer accessory. CompAce is considering whether to maintain its price or to lower its price to match ScanzAll's price. ScanzAll is considering whether or not to advertise its entry into the market. The matrix below shows the payoffs for each combination of strategies, and both players (CompAce and ScanzAll) have complete information. The rst entry in each cell represents CompAce's payoff and the second entry represents ScanzAll's payoff. Each player independently and simultaneously chooses its strategy. Use the matrix provided below to answer parts (f)-(h). l l l ScanzAll | Not Advertise Advertise Lower Price $3,000 , $4,500 $4,000 , $3,500 CompAce Maintain Price $2,000 , $2,500 $1,800 , $7,500 (f) Does CompAce have a dominant strategy? Explain using numbers from the payoff matrix. (g) Identify the Nash equilibrium. Explain why this is a Nash equilibrium using information from the payoff matrix. (h) Suppose ScanzAll makes a credible commitment to CompAce that if CompAce maintains its price, then ScanzAll will pay CompAce $600. Will this offer result in a Nash equilibrium with different strategies from those identified in part (g) ? Explain using numbers from the payoff matrix
