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PERFECT COMPETITION AND DEMAND: The demand curve for the output produced by a perfectly competitive firm is perfectly elastic at the going market price. The firm can sell all of the output that it wants at this price because it is a relatively small part of the market. As a price taker, the firm has no ability to charge a higher price and no reason to charge a lower one. The market price facing a perfectly competitive firm is also the firm's average revenue and, most importantly, its marginal revenue.
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SECOND RULE OF SUBJECTIVITY The second of seven basic rules of the economy, stating that market prices are determined by subjective values and the preferences of buyers and resource owners. Contrary to popular opinion, prices and costs are not immutably facts of nature, but are ultimately based on what people are willing to pay or accept.
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Post WWI induced hyperinflation in German in the early 1900s raised prices by 726 million times from 1918 to 1923.
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"Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations. " -- Steve Jobs, Apple Computer founder
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MC
Marginal Cost
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