1. Characteristics of competitive markets The model of perfectly competitive markets relies on these four core assumptions: 1. There must be numerous small firms and customerseach players actions have no effect on price and, thus, trade associations and collusive agreements are not possible. 2. Firms must produce a homogeneous productbuyers must regard all sellers' products as equivalent. 3. Firms and resources must be fully mobile, allowing for free entry into and exit from the industry. 4. Each firm and each customer is well informed about available products and prices. Customers know whether one supplier is selling at a lower price than another. The first two conditions imply that all consumers and firms are price takers. While the third is not necessary for price-taking behavior, assume for this problem that a market cannot maintain competition in the long run without free entry. Identify whether or not each of the following scenarios describes a perfectly competitive market, along with the correct explanation of why or why not.

Scenario Perfectly Competitive? The government has granted a patent to a pharmaceutical company for an experimental AIDS drug. That company is the only firm permitted to sell the drug. There are hundreds of high school students in need of algebra tutoring services in Philadelphia. Dozens of companies offer tutoring services, and the parents who seek out tutors view the quality of the tutoring at the different companies to be largely the same. In a small town, there are two providers of broadband Internet access: a cable company and the phone company. The Internet access offered by both providers is of the same speed. Several stores in the mall sell hooded sweatshirts. Each store's sweatshirts reflect the style of that particular store. Additionally, some stores use higher-quality cotton than others, which is reflected in the apparel's prices