Step One:Begin your essay by describing the characteristics of perfectly competitive firms. Be sure to include an explanation of how they establish price,why their demand curves are horizontal, and why the price elasticity of demand for the goods or services they sellis usually highly elastic.

Step Two:Next,create a perfectly competitive firm in the Valley and explain why the good or service that you will sell is appropriate for a perfectly competitive market and would be successful in the Valley.The good or service that you sell cannot be one of the examples provided in the textbook or class notes.

Step Three:Next, explain what will happen to the marketsupply curve, the equilibrium price, and the equilibrium quantityof the good or service that you sell if the principal resource usedtoproduceitbecomesextremely scarce.