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Use the graph provided below to answer parts (a)-(e). Marginal Cost Price, Cost ($ Average Total Cost 30 Average Variable Cost 26 20 16 11
Use the graph provided below to answer parts (a)-(e). Marginal Cost Price, Cost ($ Average Total Cost 30 Average Variable Cost 26 20 16 11 Demand 10 0 12 26 39 55 72 96 106 Quantity Marginal Revenue Nano Ware rofit-max king it the ftware. The graphMarginal Revenue Nano Ware, a profit-maximizing firm, has a patent on software, making it the only producer of that software. The graph above shows Nano Ware's demand, marginal revenue, average total cost, average variable cost, and marginal cost curves. (a) Identify the quantity that maximizes Nano Ware's profit. Explain. (b) At the quantity identified in part (a), does Nano Ware earn a positive economic profit, a negative economic profit, or zero economic profit? Explain. (c) Calculate Nano Ware's total revenue if the firm produces the allocationy efficient quantity. Show your work. (d) At a price of $26, will Nano Ware continue to produce or will it shut down in the short run? Explain. (e) Assume that at 72 units, the average total cost is $22. If the total advertising costs paid by Nano Ware increase by $216, calculate the firm's new average total cost at that output. Show your work. Assume that Nano Ware's patent expires. HotCode, a company with the capability to produce the same software as Nano Ware, intends to enter the market and charge a lower price than Nano Ware for the software. Nano Ware is considering whether to maintain its price or to lower its price to match HotCode's price. HotCode 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 (Nano Ware and HotCode) have
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