CHAPTER 8
Perfect Competition
Learning Objectives:
LO1: Distinguish among a firm, an industry, and a market
LO2: Explain what is meant by perfect competition and the
market system
LO3: Use two approaches to explain how a firm might
maximize its profits
LO4: explain what is meant by break-even price and
shutdown price
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LO1
Industry
• a group of producers
Market
• the interaction of both producers and consumers
Perfect Competition
• a market in which all buyers and sellers are price
takers
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LO1
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LO1
Self-Test
In what type of market will you find the following types of
firms/products?
a)
Hairdressing salons.
b)
Industrial chemicals in Canada.
c)
Commercial breweries in Canada.
d)
World market for coffee.
e)
Rogers Cable in Ontario.
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LO1
Increasing Cost Industry
• an industry in which the prices of resources and
products both rise as the industry expands
Decreasing Cost Industry
• an industry in which the prices of resources and
products both fall as the industry expands
Constant Cost Industry
• an industry in which the prices of resources and
products remain unchanged as the industry
expands
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