Chapter 6
Market Equilibrium and the Perfect Competition Model
The remaining chapters of this text are devoted to the operations of markets. In economics, a market refers to the collective activity of buyers and sellers for a particular product or service.
In this chapter we will focus on what might be considered the gold standard of a market: the perfect competition model. The operations of actual markets deviate from the perfect competition model, sometimes substantially. Still, this model serves as both a good initial framework for describing how a market functions and a reference base for evaluating any market.
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