Question 1 1. With the aid of a diagram explain how a monopolist determines how much output to produce and what price to charge. 2. Explain how the perfectly competitive firm decides whether to operate or shut down in the short run. 3. Explain why firms operating in monopolistically competitive markets probably will not earn an economic profit in the long run. 4. Why does interdependence of firms play a major role in oligopoly but not in perfect competition or monopolistic competition