Use the graph provided below to answer parts (a)-(e). Q Marginal Cost 5 O 0. Average Total _8 Cost 9% Average Variable <" Cost 81 68 I 45 'r l 33 X, A l i I Demand | l l | l 0 9 20 29 43 56 75108 Quantity Marginal Revenue BetterCook, a prot-maximizing rm, has a patent on a kitchen appliance, making it the only producer of that appliance. The graph above shows BetterCook's demand, marginal revenue, average total cost, average variable cost, and marginal cost curves. (a) Calculate BetterCook's total revenue if the rm produces the allocatively efcient quantity. Show your work. (b) Starting at a price of $68, if BetterCook were to decrease the price by 3%, will the quantity demanded increase by more than 3%, by less than 3%, or by exactly 3%? Explain. (c) At a quantity of 29 units, is BetterCook's marginal product increasing, decreasing, or constant? Explain. (d) Identify the quantity that maximizes BetterCook's prot. Explain. (e) At the quantity identied in part (d), does BetterCook earn a positive economic prot, a negative economic prot, or zero economic prot? Explain. Assume that BetterCook's patent expires. Scheff, a company with the capability to produce the same kitchen appliance as BetterCook, intends to enter the market and charge a lower price than BetterCook for the kitchen appliance. BetterCook is considering whether to maintain its price orto lower its price to match Scheff's price. Scheff is considering whether to advertise its entry into the market. The matrix below shows the payoffs for each combination of strategies, and both players (BetterCook and Scheff) have complete information. The rst entry in each cell represents BetterCook's payoff and the second entry represents Scheff's payoff. Each player independently and simultaneously chooses its strategy. Use the matrix provided below to answer parts (f)(h). Scheff Advertise Not Advertise Maintain Price $400, $150 $600, $250 Lower Price $300, $650 $200, $450 BetterCook (f) Does Scheff have a dominant strategy? Explain using numbers from the payoff matrix. (9) Identify the Nash equilibrium. Explain why this is a Nash equilibrium using information from the payoff matrix. (h) Suppose Scheff makes a credible commitment to BetterCook that if BetterCook lowers its price, then Scheff will pay BetterCook $50. Will this offer result in a Nash equilibrium with different strategies from those identied in part (9) ? Explain using numbers from the payoff matrix