Question 2 (a) Examine the relevant market regimes and appraise the validity of the following statements and justify your answers: (i) A perfectly competitive producer must cover all costs in order to remain in operation in the market at all time. (5 marks) (ii) A monopolist's optimal output is the level where the price equals the marginal cost. (5 marks) (b) Two laptop producers, Micron and Mega, are considering producing a new model of laptop which requires heavy investment. If both produce, both will incur a loss of $100 million. If only one produces, it will earn a prot of $200 million and the other which does not produce will earn a prot of $20 million. If both do not produce, both will earn a prot of $50 million. If Micron gets to make a decision rst, apply the sequential game concept, construct a decision tree diagram, explain and solve for the solution using a roll-back method. (1 5 marks) (25 marks)