Thus we are using the model of perfect competition whenever we apply the model of demand and supply We can understand most markets by applying the model of demand and supply Even though those markets not fulfill all the assumptions of the model of perfect competition, the model allows us to understand some key features of these markets Changes within your lifetime have made many markets more competitive Falling costs of transportation, together with dramatic advances in telecommunications, have opened the possibility of entering markets to firms all over the world A company in South Korea can compete in the market for steel in the United States A furniture maker in New Mexico can compete in the market for furniture in Japan A firm can enter the world market simply by creating a web page to advertise its products and to take orders In the remaining sections of this chapter, we will learn more about the response of firms to market prices We will see how firms respond, in the short run and in the long run, to changes in demand and to changes in production costs In short, we will be examining the forces that constitute the supply side of the model of demand and supply We will also see how competitive markets work to serve consumer interests and how competition acts to push economic profits down, sometimes eliminating them entirely When we have finished we will have a better understanding of the market conditions facing farmers and of the conditions that prevail in any competitive industry Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 470