Show work n explain

FRQ #1 (25 Points): Use the graph provided below to answer parts (a)-(e). E Marginal Cost 0} 8 3- Average Total E Cost 108 Average Variable 100 Cost Quantity Marginal Revenue s a patent on a medical device, making it the only producer of that device. 5 demand, marginal revenue, average total cost, average variable cost, and BigMed, a prot-maximizing rm, ha The graph above shows BigMed' marginal cost curves. A) Calculate BigMed' 5 total revenue if the rm produces the allocatively efcient quantity. Show your work. (4 Points) B) Starting at a price of $100, if BigMed were to increase the price by 2%, will the quantity demanded decrease by more than 2%, by less than 2%, or by exactly 2%? Explain. (3 Points) C) At a quantity of 10 units, is BigMed's marginal product increasing, decreasing, or constant? Explain. (3 Points) D) Identify the quantity that maximizes BigMed's prot. Explain. 32 Points) E) At the quantity identied in part (d), does BigMed earn a positive economic prot, a negative economic prot, or zero economic prot? Explain. (3 Points) The matrix below shows the payoffs for each combination of strategies, have complete information. The rst entry in each cell represents BigM Tauem's payoff. Each player independently and simultaneously choose below to answer parts (F)-(H). and both players (BigMed and Tauem) ed's payoff and the second entry represents 5 its strategy. Use the matrix provided Tauem m at Advertise Maintain $300, $850 $200, $640 Price Lower $420. $350 $100, $150 Price F) Does Tauem have a dominant strategy? Explain using numbers from the payoff matrix. (3 Points) Big Med G) Identify the Nash equilibrium. Explain why this is a Nash equilibrium using information from the payoff matrix. (3 Points) H) Suppose Tauem makes a credible commitment to BigMed that if BigMed maintains its price, then Tauem will pay BigMed $200. Will this offer result in a Nash equilibrium with different strategies from those identied in part G? Explain using numbers from the payoff matrix. (3 Points)