Question: a. Suppose that initially the monopolist's situation is as shown in the diagram. How much does the firm produce? What price does it charge? Are

a.Suppose that initially the monopolist's situation is as shown in the diagram. How much does the firm produce? What price does it charge? Are its profits positive, negative, or zero (or is it not possible to tell)?

b. Now suppose that the monopolist's costs rise. Concretely, suppose that the marginal cost associated with producing another unit rises by the same amount at all levels of production. How will this affect the quantity the monopolist produces and the price it charges? Will its profits rise, fall, or stay the same (or is it not possible to tell)?

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