What you’ll learn to do: define the characteristics of perfect competition
Imagine the 7-year old you had a lemonade stand. It was one of several on the street. Your neighbor, Julie, also had a lemonade stand and she typically sold her lemonade for 25 cents. You figured that in order to make more money, you would charge 50 cents and steal all her customers. Sadly, everyone bought from Julie and you had no customers at all.
Welcome to the world of perfect competition. You will see in this outcome that because your lemonade stands were essentially identical, in order to remain in business and make any profit, you needed to be a price-taker instead of a price-maker.
The learning activities for this section include:
- Reading: Perfect Competition
- Self Check: Defining Perfect Competition
Take time to review and reflect on each of these activities in order to improve your performance on the assessment for this section.