1) Firm XYZ is producing brown bread as a monopoly with a increasing marginal cost curve...

 

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1) Firm XYZ is producing brown bread as a monopoly with a increasing marginal cost curve (that means the MC curve itself is curving upwards) and it is making profit. A) Show the demand, marginal revenue, average total cost, marginal cost curves of the firm on a graph. B) What is the condition for profit maximization? C) On a separate graph, show the monopoly quantity, price and profit. D) Suppose a climate change improved the grain harvest. What happens to monopoly quantity, price and profit? E) Suppose the factory building of the firm is bought by the government and the firm does not have to pay rent. What happens to monopoly quantity, price and profit? 2) Why can firms operate as natural monopolies? 3) State why monopolies are said to be inefficient market structures. 1) Firm XYZ is producing brown bread as a monopoly with a increasing marginal cost curve (that means the MC curve itself is curving upwards) and it is making profit. A) Show the demand, marginal revenue, average total cost, marginal cost curves of the firm on a graph. B) What is the condition for profit maximization? C) On a separate graph, show the monopoly quantity, price and profit. D) Suppose a climate change improved the grain harvest. What happens to monopoly quantity, price and profit? E) Suppose the factory building of the firm is bought by the government and the firm does not have to pay rent. What happens to monopoly quantity, price and profit? 2) Why can firms operate as natural monopolies? 3) State why monopolies are said to be inefficient market structures.