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The following diagram shows the cost curves and demand curve of a profit-maximizing monopoly firm. Costs and Revenue Marginal cost Marginal revenue Average total cost
The following diagram shows the cost curves and demand curve of a profit-maximizing monopoly firm. Costs and Revenue Marginal cost Marginal revenue Average total cost Demand Q1 Q2 Q3 Q4 Q5 Q6 Quantity A. In order to maximize its profit, at which of the 6 quantities (Q1 to 26) in the diagram should the company produce? Explain. (4 marks) B. In order to maximize its revenue, at which of the 6 quantities (Q1 to Q6) in the diagram should the company produce? Explain. (5 marks) C. In order to maximize the total surplus, at which of the 6 quantities (Q1 to 26) in the diagram should the company produce? Explain. (4 marks) D. At which of the 6 quantities (Q1 to 26) in the diagram would give the firm zero profit? Explain. (4 marks) E. Is the monopoly firm experiencing diminishing marginal product? Explain
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