Description 
Your goal for this tool is to understand the profit maximization model for a perfectly competitive firm. You should learn how changes in the market conditions affect an individual firm, and how a firm can be losing money yet still maximizing its profit. 

In this tool you are examining the market for ostrich meat from two different perspectives. Remember that in Perfect Competition there are a large number of sellers, such that no one seller can influence the market. As a result, individual firms are price takers. 

The graph on the left illustrates the market for ostrich meat, and the graph on the right shows the cost and revenue functions for an individual firm producing in the ostrich meat market. 
 
 
 

There are only two sliders in this tool: one for market demand, and one for quantity. There is not a slider for price, because the firm is a price taker. The price for ostrich meat is determined in the market, by the intersection of supply and demand. The firm cannot sell any of its output at a price above the market price because their product is the same as every other producer's, and they will not sell at a price lower than the market price, because they do not need to-they can sell all of their output at the market price. To a perfect competitor, price is a given. 

By moving the Q slider you can examine the profitability of different levels of output for the firm. By moving the market demand slider, you can consider how changes in the marketplace will affect the individual firm. 

There are also four pre-programmed examples. Try to maximize the firm's profit for these examples and see what happens. Pay particular attention to the negative profit and shutdown profit examples. 
 
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