Q3. A study is carried out for DP Corp. regarding its costs and output over a period of eight months, during which time its capacity has remained constant. The results are: Output ('00) 50 Total costs (f '000) 29 27 30 70 60 26 68 34 76 a. Draw a graph of the average cost curve. b. Estimate an appropriate total cost function for the firm. C. Estimate total costs if the firm produces 8,000 units. d. What can be said about returns to scale in the industry? Give your reasoning. e. Estimate average costs at 8,000 units. f. Estimate the marginal cost of the 8,000th unit. [M-10] Q4. Two banks are operating in a duopolistic market, and each is considering whether to cut their interest rates or leave them the same. They have the following payoff matrix: Bank B Maintain rate Cut rate Maintain rate (50, 50) Bank A (20, 70) Cut rate (70, 20) 30, 30) a. Does either bank have a dominant strategy? b. Does the above game represent a Prisoner's Dilemma? Explain. c. Is there any way in which the two banks can achieve co-operation? [M-10] Q5. A pharmaceutical company has a monopoly on a new medicine. Under pressure by regulators and consumers, the company is considering lowering the price of the medicine by 10 percent. The company has hired you to analyze the effect of such a cut on its profits. How would you carry out the analysis? What information would you need? [M-10] Good Luck