Perfect competition is defined as a market situation where there are a large number of sellers of a homogeneous product. An individual firm supplies a very small portion of the total output and is not powerful enough to exert an influence on the market price. A single buyer, however large, is not in a position to influence the market price. [...]
In this article we will learn how to draw the AR and MR demand curve under perfect competition. A firm under perfect competition is price-taker. This simply means it can alter its volume of output and sales level without significantly affecting the market price of its product. This explains why a firm operating in a perfectly competitive market has no [...]
A market is said to be perfectly competitive when all firms act as price-takers — when they can sell as such as they like at the going price but nothing at a higher price. This is so because every firm is so small a part of the market that it can exert no influence on market price by selling a [...]