1)A firm on a competitive market with a total variable cost of 4Q+0.5Q² and a marginal cost of 4+Q, entered contract to pay $500/year lease for the space. The landlord would allow them to break the lease for a $200 penalty fee. Currently the output price is 24. Will the firm produce or shut down?

2)Consider the taxi market, a constant cost competitive industry. To operate a taxi an entrepreneur needs a license. Show graphically the impact of this regulation on the market supply and the efficiency of this market (as measured by the deadweight loss). A taxi medallion used to sell for up to 1.3 million dollars in NYC. After the entry of UBER the cost dropped these days to approximately 200,000. Discuss the impact of this change on the performance of this market.

3) My neighbor makes pink teapot cozies. It costs her $5 worth of yarn to make one. She asked her cousin to sell her product in his shop for $6, which would ensure a 20% profit margin. Explain the drawbacks of her pricing scheme.