Definition of a 'Competitive Firm' and a 'Perfectly Competitive Firm' In many of my intermediate microeconomics quiz and test questions I encounter the term "competitive firm" and/or "perfectly competitive firm", e.g.: In the short run, a perfectly competitive firm earning positive economic profit is...

My textbook has no explicit definition for either of the terms.  What assumptions should I make about:


The firm
The market the firm is operating in
Without seeing a particular context, it is hard to be 100% sure. But typically the term "competitive" is used as shorthand for "perfectly competitive".


  A market is perfectly competitive if everyone in that market takes the price as given. That means a seller in a perfectly competitive market can sell as much or as little as he likes (and a buyer can purchase as much or as little as he likes) at the prevailing market price. Nobody has any power to influence the market price.


Contrast this with something like a monopolist, which can set whatever price it likes and therefore obviously does not take the price as given.

A firm in a perfectly competitive market would be said to be a "competitive firm".