10. a. Explain the importance of free entry and exit in the perfectly competitive market.That is, if free entry and exit did not exist, what impact would this have on the allocation of resources and on the ability of firms to earn above-normal profits over time? b. Explain why the P = MC rule is the same as the MR = MC rule for perfectly competitive firms.

11. Indicate whether each of the following statements is true or false and explain why.

a. A monopoly will always warn economic profit because it is able to set any price that it wants to.

b. When a firm is able to set its price, its price will always be less than its MR.