How it can be known that this firm is operating in a particularly competitive market?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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The main way to tell that this firm is in a particularly competitive market (it is in fact in perfect competition) is to note that it never changes its price, regardless of the quantity of product that it sells.  Its marginal revenue is always the same as its price.  Both are $.48 per kilogram across the whole table.

A firm in perfect competition must be a price taker.  No firm in perfect competition can charge above the market price because its product is homogeneous and buyers will simply go to one of the many other firms selling an identical product for a lower price.  There is so much competition that the price cannot vary.  Since the price this firm charges is $.48 per kg across the whole table, it is clearly a firm in perfect competition.

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