microeconomic principles

1. Please answer all parts of this question:
a. Compare and contrast perfect competition with monopolistic competition, outline the underlying assumptions and provide examples of both market structures.
b. Explain and show diagrammatically the short-run and long-run equilibrium of the firm both under perfect competition and monopolistic competition.
(In total maximum 800 words; 40 points)

2. Define a natural monopoly, illustrate the underlying characteristics and provide examples of situations where natural monopolies are likely to occur.
(In total maximum 600 words; 30 points)

3. With the use of examples, illustrate how governments can encourage innovation.
(In total maximum 600 words; 30 points)