Answer
a) Sparkle's output and price are, respectively, $Q_{0}$ and $P_{0}$ (on the graph).
b) $(P_{0}-C_{0})*Q_{0}$
c) The area labeled $C$ is consumer surplus, and the area labeled $D$ is the deadweight loss.
d) If the government forced the firm to produce the efficient level of output, the company would produce more items.
Work Step by Step
a) Please see the first graph. The firm will produce until the marginal cost curve intersects the marginal revenue curve.
b) The revenue for the firm is the quantity sold, multiplied by the difference between the price of the item and the cost of the item.
c) Please see the second graph.
d) Also, since the firm would produce more items, the demand would increase. However, the firm would incur a loss (and might leave the industry in the long run).
