Answer:
(a) Graph for Economania:
To graph this, we'll need to draw a typical demand and supply curve, with Economania's profit-maximizing quantity and price labeled. The profit-maximizing quantity occurs where marginal cost equals marginal revenue, and the profit-maximizing price is determined by the demand curve at that quantity.
(b) Deadweight Loss:
The deadweight loss can be shaded as the area of welfare loss due to the inefficient allocation of resources caused by the monopoly's profit-maximizing production.
(c) Total Revenue:
To calculate total revenue, we'll use the formula: Total Revenue = Price (Pf) x Quantity (Qf).
(d) Effect of Increased Fixed Costs:
The effect of increased fixed costs on the graph will involve a leftward shift of the average total cost curve, leading to a new profit-maximizing quantity and price.
(e) Impact on Economic Profit and Deadweight Loss:
The increase in fixed costs will likely reduce economic profit and could potentially reduce the deadweight loss as the firm may produce less quantity at a higher price.
(f) Natural Monopoly:
To become a natural monopoly, certain conditions such as high fixed costs relative to variable costs, and economies of scale leading to declining average total costs at high levels of production need to be met.
(g) Shutdown Point:
The monopoly firm would shut down production when the price falls below the average variable cost, as the firm would incur less loss by shutting down than continuing to operate.
(h) Long-Run Profits in Perfect Competition:
In the long run, in a perfect competition market structure, economic profits tend to zero due to firms entering the market, increasing supply, and driving down prices until only normal profits are earned.