a)

i. What are the FOUR main characteristics of pure competition?

ii. The key assumptions in the pure competition are regarding the demand curve, marginal revenue, and average revenue. Elaborate with the help of graphs.

b) Sunrise Juice Company sells its output in a perfectly competitive market. The firm's total cost function is given in the following schedule:

Total costs include a "normal" return on the time (labor services) and capital that the owner has invested in the firm. The prevailing market price is $7 per unit.

i. Prepare the marginal cost and average total cost schedules for the firm.

ii. What is the firm's profit-maximizing output level?

iii. Is the industry in long-run equilibrium? Justify your answer.

Output Total Cost (Units) (S) 50 10 120 20 170 30 210 40 260 50 330 60 430