Chapter 10 - Perfect competition. After studying this chapter, you will able to: Define perfect competition, explain how price and output are determined in perfect competition, explain why firms sometimes shut down temporarily and lay off workers,. | Perfect Competition Objectives After studying this chapter, you will able to Define perfect competition Explain how price and output are determined in perfect competition Explain why firms sometimes shut down temporarily and lay off workers Explain why firms enter and leave the industry Predict the effects of a change in demand and of a technological advance Explain why perfect competition is efficient Students find this topic challenging. Part of their problem is that it builds on the cost curves of the previous chapter and many of them still have only a shaky grasp of that material. So emphasize the cumulative nature of economics and remind the students of the huge payoff from mastering material a bite at a time. You can help your students by emphasizing the two primary goals of this chapter: (1) to derive the market supply curve in a competitive industry and (2) to deepen your students’ understanding of how competition among self-interested consumers and producers moves . | Perfect Competition Objectives After studying this chapter, you will able to Define perfect competition Explain how price and output are determined in perfect competition Explain why firms sometimes shut down temporarily and lay off workers Explain why firms enter and leave the industry Predict the effects of a change in demand and of a technological advance Explain why perfect competition is efficient Students find this topic challenging. Part of their problem is that it builds on the cost curves of the previous chapter and many of them still have only a shaky grasp of that material. So emphasize the cumulative nature of economics and remind the students of the huge payoff from mastering material a bite at a time. You can help your students by emphasizing the two primary goals of this chapter: (1) to derive the market supply curve in a competitive industry and (2) to deepen your students’ understanding of how competition among self-interested consumers and producers moves resources from where they are less valued to where they are more valued and to an efficient allocation. Explain that although Chapter 3 (Demand and Supply) and Chapter 5 (Efficiency and Equity) covered these same topics, they did so at a level that is one step removed from the decision makers. Remind the students that they’ve seen how consumer decisions lead to the best use of a household’s income. Point out that they are now going to see how producer decisions are made and how they interact with consumer decisions. You might like to use the metaphor that the chapter strips away more of the veil that hides the invisible hand. Competition Perfect competition is an industry in which: Many firms sell identical products to many buyers. There are no restrictions to entry into the industry. Established firms have no advantages over new ones. Sellers and buyers are well-informed about prices. The range of market types. Remind the students of what they learned in Chapter 9 about the spectrum of .
