{"id":1169,"date":"2015-05-11T23:15:45","date_gmt":"2015-05-11T23:15:45","guid":{"rendered":"https:\/\/courses.candelalearning.com\/masterymicro1xngcxmaster\/?post_type=chapter&p=1169"},"modified":"2016-03-21T19:14:58","modified_gmt":"2016-03-21T19:14:58","slug":"why-it-matters-9","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/chapter\/why-it-matters-9\/","title":{"raw":"Why It Matters: Perfect Competition","rendered":"Why It Matters: Perfect Competition"},"content":{"raw":"

Why analyze a firm's profit maximizing decisions under conditions of perfect competition?<\/h2>\r\nThis module is the second in the theory of the firm and the first of four modules examining models of market structure. Market structure means, in a nutshell, how competitive or monopolistic is a particular industry. It should be clear that market structure influences how firms behave.\r\n\r\nWe start by looking at the ideal model of perfect competition. This model is a bit of a head scratcher since there are, actually, very few examples of industries like this in the real world. Why then do we study it? Here\u2019s a question for you to think about as you move through the module: What\u2019s so perfect about perfect competition? Hint: the model has certain ideal features that you will learn.\r\n\r\n[caption id=\"attachment_2116\" align=\"aligncenter\" width=\"440\"]\"Four<\/a> Tomato Collage. Farmer\u2019s Market<\/a> by Andre Natta, CC-BY<\/a>. Firey Tomatoes<\/a> by Swaminathan, CC-BY<\/a>. NorthCharleston Farmer\u2019s Marke<\/a>t by NorthCharleston, CC-BY-SA<\/a>. What\u2019s Better than Love<\/a> CC torbakhopper, CC-BY<\/a>.[\/caption]\r\n\r\nHave you ever noticed that all the tomatoes of the same type in a farmer\u2019s market cost about the same price? The same thing is true of roadside vegetable stands in the countryside. If one stall in a locality has tomatoes for $3 per pound, they all do. \u00a0Now the price may change from week to week, but it\u2019s always the same across the different vendors in the market. You will soon learn why this is.\r\n\r\nThere are more similarities than differences between this and the following three modules. What you learn in this module will carry over and help you understand the next ones, so the more effort you put into learning this one, the easier the next three modules will be.\r\n