Pure competition- a very large number of firms producing a standardized product e. g. cotton. New firms can enter or exit the market quickly. A very large number of independently acting sellers often offering products in large national or international markets. Price takers- do not exert control over product price. Each firm produces a small fraction of total output. Perfectly elastic- the firm cannot obtain a higher price by restricting output or increase sales by lowering sales price. Average revenue- revenue per unit- received by the seller is the same as the sales price. Total revenue- for each sales level is found by multiplying price by the quantity the firm can sell. Marginal revenue is the change in total revenue that results firm selling one more unit of output. Profit maximization in the short run: total revenue-revenue- Profit and loss are adjusted in the output not the price.