The theory of supply and demand usually assumes that markets are perfectly competitive.

Perfectly competitive markets drive prices to the marginal cost of production, not to zero.

In a perfectly competitive industry, the market solves two connected problems.

In a perfectly competitive firm the price is given.

The first standard problem is that the market is not perfectly competitive.

Assume the structure of the both the product and factor markets are perfectly competitive.

A perfectly competitive firm's decisions are limited to whether to produce and if so, how much.

A firm in a less than perfectly competitive market is a price-setter.

When economies of scale are important, industries will not be perfectly competitive.

In perfectly competitive markets, market participants have no market power.