2.  Students will describe the four conditions that are in place in a perfectly competitive market  Students will list two common barriers that prevent firms from entering a market  Students will describe prices and output in a perfectly competitive market

3.  Perfect Competition – a market structure where a large number of firms all produce the same product

4.  Many buyers and sellers ◦ Limits the ability of one firm to be able to control the market  Identical product ◦ Commodity that is the same no matter who produces it. Example – milk, petroleum  Informed buyers and sellers ◦ Prices ◦ Product knowledge ◦ Etc.  Free market entry and exit ◦ Can enter and leave market when you wish

5.  Imperfect Competition ◦ One of just a small amount of firms ◦ Lack of competition ◦ Higher prices ◦ Firms wanting in, but can’t  Startup Costs ◦ Expenses that a firm must pay before they can begin to produce  Technology ◦ Knowledge ◦ Skills

6.  Prices and production costs are kept low in a perfectly competitive market  Prices in this type of market are the lowest sustainable prices possible  Because of competition prices are forced down to a point where they just cover the costs of doing business  Output then will reach a point where suppliers are just covering their costs