Maximizing profits in market structures

Competition дЫТ Competitive firms are price takers; therefore, they contend with a horizontal demand curve. They may produce as much or as little as they want because the market determines the price, and at any one time there will always be a substitute to the firmдЫЄs product (i.e., the competitionдЫЄs product). The competitive market is therefore perfectly elastic (Mankiw, 2009). The product is always homogeneous in a competitive market, and producers have no control over price. There is perfect knowledge by all buyers and seller, and perfect mobility in all factors in the competitive market (Jain & Khanna, 2009).