1.What are the four assumptions of the perfectly competitive model? Critics are fond of pointing out that few, if any, real-world markets satisfy all four conditions, implying that the competitive model has little relevance for real-world markets. How would you respond to these critics?

2.How can consumers of apartments in Atlanta have a downward-sloping demand curve for apartments, and yet each Atlanta rental property owner face a horizontal demand curve?

3.Assume that a competitive firm has the short-run costs given in Table 8.1. What is the firm's most profitable output, and how large is profit if the price per unit of output is (a) $15? and (b) $26?