What is perfect competition: perfect competition: a market in which: Many firms sell identical products to many buyers. There are no restrictions on entry into the market. Established firms have no advantage over new. Sellers and buyers are well informed about prices ones. In perfect competition, each firm produces a good that has no unique characteristics, so consumers don"t care which firms good they buy. Price takers: price taker: a firm that cannot influence the market price because its production is an insignificant part of the total market. E. g. all wheat is the same as any farmer. Market price is /tonne (highest price you can get for your wheat). That is the price you will sell it at. Economic profit and revenue: economic profit: total revenue minus total cost. Calculated by dividing the change in total revenue by the change in the quantity sold: total revenue, marginal revenue. Equal to the price multiplied by the quantity sold.