Question 1 a. With the aid of a diagram explain how a monopolist determines how much output to produce and what price to charge. [4 marks] b. Explain how the perfectly competitive firm decides whether to operate or shut down in the short run. [4 marks] c. Explain Why firms operating in monopolistically competitive markets probably will not earn an economic profit in the long run. [4 marks] (1. Why does interdependence of firms play a major role in oligopoly but not in perfect competition or monopolistic competition? [4 marks] Question 2 a. A producer borrows money and starts a business. He himself looks after the business. Identify implicit and explicit costs from this information. Explain. [4 marks] 1'). List and explain which of the following is a fixed cost or a variable cost for Caribbean Airlines. [5 marks] i. The cost of fuel used in its planes. ii. The rent on its Piarco headquarters. iii. The lease payments on its current inventory of jets. iv. The cost of peanuts it serves to passengers. v. The salary paid to the Chief Executive Officer. c. How is the difference between average total cost and average variable cost impacted by an increase in output? [3 marks]