This chapter introduces the readers to market structures and perfect competition. After reading this chapter and working on the practice questions, the learners should be able to differentiate between different market structures; recognize real-world examples of perfectly competitive markets; apply the rule for profit maximization to find the optimal output level of a firm operating in a perfectly competitive market; analyze the decision of a firm to produce or shut down in the short run, and to stay or exit the market in the long run; graphically show the profit or the loss of a firm; describe the price adjustment process that leads to a long-run competitive equilibrium; and analyze efficiency in the context of a perfectly competitive market.