6: Perfect Competition

Microeconomics 1e · LibreTexts

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    From LibreTexts, under CC BY-NC-SA 4.0, as the source states it; its equations are written in TeX, which the PDF shows typeset. This page at LibreTexts.

    Learning Objectives

    Upon completion of this module, you will be able to:

    • Understand the importance of the profit motive and the implications of profit maximization for the competitive firm.
    • Know the essential characteristics and behavior of competitive firms (price taking, many firms, low barriers to entry, etc.).
    • Distinguish between market demand and demand from the viewpoint of the firm.
    • Be able to explain short-run and long-run decision making by the competitive firm.
    • Know both the structural and behavioral characteristics of competitive markets.
    • Understand the role that entry and exit play in achieving long-run zero profit, the lowest possible market price, the highest possible output, the most efficient choice of output, and the most productively efficient outcome (P = min ATC).
    • Understand the difference between short-run concepts (short-run equilibrium, shutdown, production decisions) and long-run concepts (long-run equilibrium, exit, and entry).

    This page titled 6: Perfect Competition was last modified on Wed, 10 Jul 2024 19:59:50 GMT and is shared under a CC BY-NC-SA 4.0 license and was authored, remixed, and/or curated by Martin Medeiros.