Perfectly competitive firms are those that operate in markets with many buyers and sellers who produce identical products. These firms have no control over prices and are price takers rather than price makers.
Related terms
Market equilibrium: Market equilibrium occurs when the quantity demanded by buyers equals the quantity supplied by sellers at a particular price.
Price elasticity of demand: Price elasticity of demand measures how responsive consumers are to changes in prices.
Profit maximization: Profit maximization is the goal of firms to produce at an output level where marginal revenue equals marginal cost, resulting in the highest possible profit.