1. Identify the assumptions of a perfectly competitive market. What types of goods meet the conditions? What are some examples of markets that are highly competitive but may not meet the exact conditions? (or maybe a portion of the market that has a perfectly competitive element/option) *Just some ideas to get the ball rolling...what type of haircut might be considered perfectly competitive? Why aren't all haircuts perfectly competitive? List a handful of shops in a shopping center/strip mall close to your house, which ones are in a competitive market, which one's not as competitive? 2. Now that we've got you thinking about different stores around town...when solving for the number of firms in a market you compare Q*mkt to Q*firm, so the number of firms is impacted by the size of the total market vs the optimal size of the firm. For instance if Qmkt=1,000 and Qfirm=50, we would expect 1,000/50 - 20firms (20 firms make Q=50each to satisfy the market demand of 1,000) But if Qfirm =500, we would expect 1,000/500 -2 firms. So we would expect a lot of firms in the market if there is either high demand or small optimal firm size and few firms in markets with either low demand or large optimum firm size. Come up with an example for each of these 4 scenarios: A. High demand, small firms = Large number of small firms/stores B. High demand, large firms = Low number of popular large firms/stores C. Low demand, small firms = Low number of small firms/stores D. Low demand, large firms = Low number of firms/stores (this one might be tough, interested to see what you come up with)