Question 3. Scenario: Tobac Co. is a monopolist in the cigarette market in Nicotiana Republic, where the U.S. dollar is used as the official currency. The firm faces the demand curve shown below. The firm has a constant marginal cost of $2.00 per pack. The fixed cost of the firm is $50 million. To answer the questions below, it is useful to know that the equation of the (inverse) demand curve is P = 8 - 0.04Q, where Q is the quantity demanded (in millions of packs) and P is the price per pack (in $). Also, you should draw in the marginal revenue curve. Price ($ per pack) 10 8 6 2 50 100 150 200 Quantity (millions of packs) a) What is Tobac Co.'s total revenue when it sells 50 million packs of cigarettes? b) By how much does Tobac Co.'s revenue go up (or down) when its quantity sold goes up from 50 million to 100 million packs of cigarettes? c) When the quantity sold goes up from 50 million to 100 million packs of cigarettes, the price effect on the firm's revenue is and the quantity effect is d) When the quantity sold goes up from 100 million to 150 million packs of cigarettes, the price effect on the firm's revenue is and the quantity effect is e) Tobac Co.'s total revenue is maximized when it sells packs of cigarettes at per pack. Answer: a) $300 million