This document contains sample responses to past exam questions on perfect competition. It includes: 1) An explanation of why a perfectly competitive firm can only make abnormal profits in the short-run using diagrams, as new firms enter in the long-run bringing prices and profits down. 2) A discussion of why a loss-making firm in perfect competition would shut down in the long-run, as it cannot cover its total costs. 3) A potential response discussing the advantages of perfect competition over monopoly in providing lower prices, greater choice and efficiency, and examples of each market structure.