Answer to Question 1
NAFTA, or the North Atlantic Free Trade Agreement is an agreement signed by the United States, Mexico, and Canada in which the three countries agreed to establish all North America as a free-trade zone.
Answer to Question 2
The statement is false. Firms in perfect competition face a large number of perfect substitutes for their products. Thus, the demand facing a firm in perfect competition is perfectly elastic (horizontal). While firms in monopolistic competition face a number of close substitutes, they are the only producers of their particular products. This gives them some ability to set the prices of their products without losing all demand. Thus, the demand curve faced by a firm in monopolistic competition is downward sloping and less elastic than that faced by a firm in perfect competition.
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