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Step 1

A.

From the table given above, it can be interpreted that the maximum profit that Tecky Corp. can earn is \$1480 by selling 4 units of output. However, after this the revenue starts declining as the decrease in price is more responsive than an increase in quantity which reduces the profit level of the Tecky Corp. Furthermore, being a manager, I would suggest the Corp. to produce 4 units of output only as at 4th unit Profit is \$456 (\$1480 - \$1024) whereas at 5th unit of output profit is \$96 (\$1400 – 1304). Hence, profit of monopolist (Tecky Corp.) declines by producing more, that is, 5th unit.

Step 2

B.

The surplus of Tecky Corp. is maximized by producing 2 units of output as at that level the surplus is total revenue minus total cost which ...

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