This chapter explores what determines the price in a market—more specifically, in a perfectly competitive market. Working with these exercises will give you a deeper understanding of how markets are affected by shocks to supply and demand, and of opening up to international trade. Many of the exercises deal with electricity and energy markets, for two reasons: First, these are relatively homogeneous goods (electricity is electricity, gas is gas), and therefore well suited for analysis under perfect competition. Second, energy markets are high on the international political agenda, tied to fundamental issues of climate and conflict, and therefore interesting from a policy perspective.