Economics Year 13 revision Day 6 - Perfect Competition

On day 6 of the Year 13 Recap we look at the theory of perfect competition and the welfare implications of it. 

The theory of perfect competition outlines the market conditions that need to hold for intense rivalry and competition to take place between firms in an industry.

It is a theoretical model because the conditions which are required for this structure to prevail are characteristics which cannot hold in the real world. However, this theoretical framework is a useful analytical and evaluative tool to use to compare across the outcomes and welfare implications of different market structures. 

Here Jacob guides you through the revision slide on the theory of perfect competition: