Introduction to Perfect Competition and Its Assumptions

The video tutorial explores the concept of perfect competition, a theoretical market structure at the competitive end of the spectrum. It covers the assumptions of perfect competition, including many buyers and sellers, perfect information, homogenous products, and no barriers to entry or exit. The implications of these assumptions are discussed, such as firms being price takers and facing a perfectly elastic demand curve. The video also explains the long-run equilibrium where firms make normal profits. Although perfect competition is theoretical, it serves as a useful comparison tool for real-world markets.

Explain the role of barriers to entry and exit in a perfectly competitive market.

What are the characteristics of demand in a perfectly competitive market?

What happens to market supply when firms are making supernormal profits?

How does the concept of perfect competition serve as a theoretical construct?