TechFlow, a profit-maximizing firm, has a patent on a comput…

TechFlоw, а prоfit-mаximizing firm, hаs a patent оn a computer accessory, making it the only producer of that computer accessory. The following graph shows TechFlow's demand, marginal revenue, average total cost, average variable cost, and marginal cost curves. This graph illustrates TechFlow’s market as the sole producer of a patented computer accessory. The vertical axis shows price and cost in dollars, ranging from $20 to $60, and the horizontal axis shows quantity. The graph includes a downward-sloping demand curve and a downward-sloping marginal revenue curve below it. It also features a U-shaped average total cost curve, a U-shaped average variable cost curve below it, and an upward-sloping marginal cost curve intersecting both. Horizontal dashed lines indicate prices at $20, $22, $33, $39, $50, and $60, while vertical dashed lines mark quantities from 0 to 98 units. The graph helps illustrate TechFlow’s pricing, production, and cost relationships as a profit-maximizing monopolist. Use the information from the graph to answer questions a-e. Identify the quantity that maximizes TechFlow's profit. Explain. (2 points) At the quantity identified in part (a), does TechFlow earn a positive economic profit, a negative economic profit, or zero economic profit? Explain. (2 points) Calculate TechFlow's total revenue if the firm produces the allocatively efficient quantity. Show your work. (2 points) At a price of $60, will TechFlow continue to produce or will it shut down in the short run? Explain. (2 points) Assume that at 74 units, the average total cost is $62. If the total rent paid by TechFlow increases by $370, calculate the firm's new average total cost at that output. Show your work. (2 points) Assume that TechFlow's patent expires. DigitalMax, a company with the capability to produce the same computer accessory as TechFlow, intends to enter the market and charge a lower price than TechFlow for the computer accessory. TechFlow is considering whether to maintain its price or to lower its price to match DigitalMax's price. DigitalMax is considering whether or not to advertise its entry into the market. The following matrix shows the payoffs for each combination of strategies, and both players (TechFlow and DigitalMax) have complete information. The first entry in each cell represents TechFlow's payoff and the second entry represents DigitalMax's payoff. Each player independently and simultaneously chooses its strategy. Use the matrix provided below to answer questions f-h. Table: TechFlow and DigitalMax Payoff Matrix DigitalMax Not Advertise Advertise Tech Flow Lower Price $3000, $4500 $4000, $3500 Maintain Price $2000, $2500 $1800, $7500   Does TechFlow have a dominant strategy? Explain using numbers from the payoff matrix. (2 points) Identify the Nash equilibrium. Explain why this is a Nash equilibrium using information from the payoff matrix. (4 points) Suppose DigitalMax makes a credible commitment to TechFlow that if TechFlow maintains its price, then DigitalMax will pay TechFlow $600. Will this offer result in a Nash equilibrium with different strategies from those identified in part (g)? Explain using numbers from the payoff matrix. (4 points)