Looking around your city, what businesses do you think come closest to the model of a perfectly competitive market? Explain why this is the case using correct economic terms and concepts.

Productive efficiency and allocative efficiency are two concepts achieved in the long run in a perfectly competitive market. These are the two reasons why we call them “perfect.” How would you use these two concepts to analyze other market structures and label them “imperfect?”

State and explain the assumptions that govern perfectly competitive markets

Explain in detail how purely competitive markets, in the long-run, know how to adjust to and provide the correct output, at the correct price. Give an example of a good or service you might buy that is closest to being in a purely competitive market. Explain your logic.

Can you think of a product that meets at least most of the criteria required for a perfectly competitive market? Which criteria does it fail to meet?

You read in a business magazine that farmers are reaping high profits. With the theory of perfect competition in mind, what do you expect to happen over time (in the long run) to each of the following? The equilibrium output in agricultural markets based on what happens to the price given the change in supply, what do you think will happen to the equilibrium quantity? Will it remain the same, increase or decrease?

How do firms in a competitive market work?

Analyze the likely effects of a perfectly competitive market on price, quality, and innovation of goods and services?