1. What are the main characteristics of the competitive market?
2. Explain the difference between revenue and profits. Which is it that firms maximize?
3. Draw and scan a cost curve and using those costs show on your graph using a horizontal demand curve of where the output with a firm in perfect competition (not imperfect competition) will be placed. (Under this Perfect Competitive situation remember that a firm is making a normal rate of profit for the owner to just meet his or her family's obligations and a bit extra in interest)
4. If a firm cannot meet that demand how far down will it allow its price to be before it will have to shut down?
5. Does the Perfect Competitive firm's price equal the minimum ATC curve in the long run, the short run or both? Remember the ideas on Shutdown above to successfully answer this question.