Why do prokaryotes have circular DNA?

Circular DNA is actually more efficient than the linear DNA that we have. Extra energy has to be spent maintaining the loose ends via telomerase with linear DNA. It is a more delicate system which adds new potential deletions and mutations. read more

Prokaryotes mostly have circular DNA because circular DNA evolved first, before linear DNA, and prokaryotes descended from common ancestors with circular DNA. DNA polymerase can replicate circular DNA completely, but cannot do so with linear DNA - a small bit of DNA at the end gets cut off. read more

There is also cytoplasmic DNA free-floating in eukaryotic cells. These are also circular and normally contain short copies of chromosomal DNA sequences. Their function is not well understood. In prokaryotes, some species of spirochaetes and bacteria have been found with linear chromosomes. In addition, prokayrotes contain extra-chromosomal DNA called plasmids. read more

Circular DNA bypasses the need for repeating ends on their chromosome(s). Disadvantage (from a eukaryotic standpoint) is that you cannot have crossing over with circular DNA. If you want to impress your teacher, tell her that some bacteria do have linear chromosomes. read more