This chapter discusses perfect competition in markets. It begins by introducing lithium as an important input for batteries that has seen rising demand but falling prices. This is explained by the entry of new firms into the lithium industry. The chapter then outlines learning objectives and a chapter outline covering characteristics of perfect competition, how individual firms determine output levels, short-run profits, supply curves, and long-run equilibrium with entry and exit of firms. It also discusses how price is determined through the interaction of market supply and demand.