Question # 2 (a) For the monopoly shown in the figure below:

(i)Determine the profit maximizing output and price.

(ii)What is the marginal cost? When monopoly maximizes its profit.

(iii)For the monopoly shown in the figure above, what is the economic profit?

(b) National dental clinic specializes in root canal operation without administration of pain-killing drugs. If the output (Q) is measured as number of root canals performed on daily basis, define the short run measures of costs: FC, VC, TC,MC,AFC,AVC, ATC Do the necessary calculations and fill the spaces in the table given below:(Copy & Complete the table below )

Q FC VC TC MC AFC AVC ATC

1 $13 $38

2 $28

3 $70

4 $64

5 $22

6 $108

7 $133

8 $20

Question # 3Answer the following questions. (Explain graphically and assume all necessary figures to support your answer where necessary)

I.Explain graphically how indifference curve analysis can be used to derive a demand curve?

II.If firms in a competitive industry incur an economic profit, what happens to supply, price, output, and economic profit in the long run? Explain

III.What is the relationship between the marginal revenue curve and the demand curve for a single-price monopolist?

Explain the Law of diminishing return and why is it applicable especially in agriculture sector?