Option 1: The Average Revenue and Marginal Revenue curves of a perfectly competitive firm are perfectly elastic.

The correct answer is that this statement is correct. In a perfectly competitive market, there are many buyers and sellers, and each firm is a price taker. This means that the firm has no control over the price and must sell at the prevailing market price. Therefore, the demand curve facing the firm is perfectly elastic, and as a result, both the Average Revenue and Marginal Revenue curves are also perfectly elastic.

Option 2: The Marginal Revenue curve of the monopoly firm is above its Average Revenue curve.

The correct answer is that this statement is NOT correct. In a monopoly market, there is a single seller with significant control over the price. As a result, the demand curve facing the monopoly firm is downward sloping. This means that the Marginal Revenue curve lies below the Average Revenue curve. Marginal Revenue is always less than the Average Revenue because the firm must lower the price to sell additional units of output.

Option 3: In the long-run, a competitive firm earns only normal profits.

The correct answer is that this statement is correct. In the long-run, a competitive firm earns only normal profits, which means that it is earning