5. Why is perfect competition assumed to be the best market situation in most cases? Draw a graph showing the long run result of perfect competition and explain why it benefits society.

6. What creates monopoly?

7. Draw a graph comparing artificial monopoly to a competitive market assuming each has the same economics of scale (same size tools/factories). Which market structure would produce more? Which market structure would charge more?

8. Usually, a monopoly is considered a social bad, but there are exceptions when society may benefit from having a monopoly. What examples are given for when monopoly could be considered beneficial?

9. Using your notes and the book, examine each of the barriers to entry and explain which are artificial or natural. If the monopoly is considered a social bad, what can the government do to protect us?

10. Is monopolistic competition a monopoly market or a competitive market? List at least four of the ways firms can differentiate a product (also called nonprice competition). Then give an example for each.

11. Draw and explain the prisoner's dilemma model. What key concept does the model show?