Question: Question 2 Refer to the figure 2 below to answer the questions. MC 13 ATC D Price per unit C AVC 7 B 4 A

Question 2 Refer to the figure 2 below to answer the questions. MC 13 ATC D Price per unit C AVC 7 B 4 A Units of output Figure 9.3 2.1) This firm's shutdown point corresponds to Point (1M) 2.2) This firm will continue to operate in the short run, but incur an economic loss if the range of price is between Explain your answer. (2M) Working calculation: 2.3) This firm will earn a zero economic profit if price is Explain your answer. (2M) Working calculation: (5 Marks) Question 3 Explain why monopoly is one of the sources of market failures. Give your explanation by showing graph(s) or calculation. ANSWER For Question 3: (10 Marks)

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