Perfect competition is a market structure characterized by a large number of buyers and sellers of essentially the same product. The firms produce a standardized product and there is a free entry and exit of these firms to and from the industry. The firm in a purely competitive market faces a perfectly elastic demand curve at the price determined by equilibrium in the market (Hirschey 379). The firm in a short-run supply curve is the short-run …showed first 75 words of 788 total…

…showed last 75 words of 788 total…expansion. The long-run supply curve in a constant cost industry is therefore seen to be perfectly elastic, even though the short-run supply curve has a positive slope. References: Cohn, Elchanan. "A reexamination of the price effects of a unit commodity tax under perfect competition and monopoly." Public Finance Quarterly, (1996): July, pp. 391-396. Heath, Will Carrington. "Perfect competition and the transformation of economics." Southern Economic Journal, (1997): January, pp. 825. Hirschey, Mark. "Managerial Economics." 10th edition, (2003): pp. 281-314, 379.