1. Complete the following: 1. Drnw a graph for a perfectly competitive rm in the short run, illustrating both of the following twn situations {include ATE. AVG, MC 3: MR): I An economic prot less than zem. (I more) I The rm is able to cover all its xed costs. H more) 2. Should the I'm shut down in the short run? Explain. {2 marks} 3. Describe the transition from the short lull to the long run in this perfectly competitive industry. How do you know when the transition is complete? (2 mares) 4. Drnw the long run equilibrium graph for this rm. (2 marks} 2. Complete the following: 1. Compare the eiciency of a monopoly firm compared to a perfectly competitive rm, in terms of output efficiency. {2 mar-h} 2. Draw a graph clearly illustrating the deadweight loss associated with monopoly. {2 marks) 3. Consider a duopoly candy industry: Nutty Fudge and Sweet 'n Sour. Each firm must decide how much to spend on advertising. Each firm can eitlm spend a large amount on advertising (Big Ad} ora small amount on advertising [Low Ad}. The Payoff nutrix below illustrates the profit outcomes Sweet '11 Sour's Strategies Bi g as Low an Big as $8. $8 520. $1 Nutty Fudge's Strategies Low Ad 55. 522 $15, $15 1. Assume a noncooperative game. Is there a dominant strategy? If yes, what is it? (2 marks} 2. Is there a Nash Equilibrium? If yes. what is it? Explain. (3 marks) 3. What is the collusive outcome? (1' more) 4. Is the collusive outcome a stable equilibrium? Explain