Show all necessary steps and reasoning that lead to the answers.

a) List 3 key characteristics of a perfectly competitive market (not individual firm)

b) State and explain briefly 2 similarities between a perfectly competitive market and a monopolistic competitive market.

c) State and explain briefly 2 differences between a perfectly competitive market and a monopolistic competitive market.

d) With help of hypothetical MC, ATC and Demand curves of a perfectly competitive firm, illustrate a profit for the firm.

e) Reproduce the above curve in d), illustrate and explain briefly in words how a profit for the firm can be eliminated in the long run.