1. Define a price taker and explain, using numerical example, why the average revenue and marginal revenue are equal to the price that the firm charges.2 Marks

1. Graphically represent normal profit and explain why making normal profit is a requirement for any firm who wishes to remain in business in the long run.3Marks

1. Why does the share market closely reflects a perfectly competitive market?1 Mark

1. Why is a perfectly competitive market structure very unlikely to exist in the real world?2 Marks