Question 1 Please review the diagram below for a firm that is a local monopoly selling portable home air conditioning units. The owners of this company have conducted relevant research to forecast their demand, marginal revenue, marginal cost and average cost, which are shown in the diagram below. Answer the subsequent questions given your interpretation of the diagram to provide the owners with advice in relation to their conduct and competing in their market. Price MC AC 260 220 180 160 40 D = AR 200 220 260 290 Quantity MR a. Use the profit maximising condition to advise on the quantity that the firm should produce and the price they should charge. b. Given the information in the diagram what would the total revenue and total cost of this firm? c. Would the firm earn supernormal profit or make a loss? What is the size of the profit or loss? d. Identify the equilibrium quantity and price if the firm is forced to operate as a perfectly competitive enterprise. (15 marks)