(a) A city has nearly 500 restaurants with new one entering regularly as the population grows. The city decides to limit the number of restaurant licenses to 500. Which characteristics of this market are consistent with perfect competition and which characteristics are not consistent with perfect competition? Please give an explanation.

(b) Does an individual perfectly competitive firm have any incentive to invest in research and development? You may assume that the market remains perfectly competitive both before and after the research and development and therefore all the assumptions of perfect competition will hold at all times. Please give an explanation.

(c) The United States Postal Service (USPS) has a constitutionally guaranteed monopoly on first class mail (mailing an envelope for $0.55). The monopoly exists to this day. Why hasn't this monopoly enabled the USPS to earn profits (they currently lose a few billion dollars every year)? Please give an explanation.