... In perfect competition, "price is determined for the industry (and for the firm) by the intersection of demand and supply." (Griffiths & Wall, P155) If we assume all firms have profit maximising objective in common at this point, we could get Graph 1 below. Under perfect competition supply curve, which is also the marginal cost curve, intersects demand curve, which is also marginal revenue curve, at price Pc and quantity Qc. Under this condition, everyone is a price taker, because there are no barriers to entry, in other words, the concentration ratio is very low. This is very common in wood products, and building materials in UK. In Chart 1 we can also find that industries like rubber products, tyres printing industry have very low concentration ratios. (Ganley & Salmon, P189) On the other hand, monopoly has its unique marginal revenue curve which intersect marginal cost curve at price Pm and ...

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