1) Write down some examples of industries that are (close to) perfectly competitive. What attributes do they have to be considered perfectly competitive?

2) "Strong prices traditionally cause an expansion in a perfectly competitive industry, eventually bringing an end to high prices and manufacturers' prosperity." Explain the statement using appropriate diagrams.

3) Indicate whether the following statement is TRUE or FALSE and explain your answer: Since firms in perfect competition can enter and exit the market in the long run, their economic profits are zero in the long run.

4) MULTIPLE CHOICE (identify the one best answer below and explain your reasoning for each option):

If a profit-maximising, perfectly competitive firm is producing a quantity at which price is between average total cost and average variable cost, it will a. keep producing both in the short run and in the long run

b. keep producing in the short run but exit the market in the long run

c. shut down in the short run but return to production, in the long run, d. shut down in the short run and exit the market in the long run. There is not enough information to answer the question