Since there are so many buyers, demand is considered infinite. If a seller were to price their goods above market price, their demand would drop to zero because the consumer can easily get the good for cheaper from another firm. Since there are so many buyers and sellers in a perfectly competitive market, the price of a good is set by market demand.

Perfect competition is a hypothetical market situation where the abundance of buyers and sellers who have perfect information on the market makes it impossible for market participants to influence the price of a good. In perfect competition, there are no barriers to entering and exiting the market, the products they are selling are identical, and there is no price control. Perfect competition is a hypothetical situation where the participants in the market are so plentiful and are perfectly informed about their options that neither buyers nor sellers can influence the price of a good, which makes it impossible to form a monopoly.

Before we go into that, let's define perfect competition. In perfect competition, the demand and supply curves present differently than how we are used to seeing them depicted. Let's get to it! Perfect Competition Demand and Supply Curve

But what does that mean for consumer demand, and how does the individual firm cope with these conditions? What would a demand curve in perfect competition look like? Those are just some of the questions we will find answers to in this text. What would happen if firms faced no competition in their market? If all of their products were the same and no one was able to hold the monopoly power over any good or service? Well, then, the market would be perfectly competitive. Price Determination in a Competitive Market.Market Equilibrium Consumer and Producer Surplus.Determinants of Price Elasticity of Demand.Cross Price Elasticity of Demand Formula.Effects of Taxes and Subsidies on Market Structures.Monopolistic Competition in the Short Run.Monopolistic Competition in the Long Run.Behavioural Economics and Public Policy.

Cost curve perfect competition shift