1. What is the difference between accounting profit and economic profit (10 points)?
2. Explain the difference between fixed and variable costs, and the relationships among total costs, average costs, and marginal costs. Give examples. (20 points)
3. What is perfect competition and explain how perfect competition works? (30 points)
4. What are the disadvantages of perfect competition models? Explain barriers of entry. (20 points)
5. Explain the role played by profits, entry, and exit in determining a competitive industry run equilibrium. (20 points)