In this chapter, we discuss the production decisions of the firm in a purely competitive market structure. In Chapter 33, we discuss the prices and profits for a perfect monopoly market, and in Chapter 34 for monopolistically competitive and oligopolistic market structures. At the outset, we should state that very few, if any, firms operate in a situation of pure competition or pure monopoly, so analysis of these situations is not realistic for understanding most pricing procedures. Nearly all businesses in the United States today are in either monopolistically competitive or oligopolistic industries. Yet it remains important to understand pure competition and monopoly. The importance of understanding the analysis of pure competition is largely ideological. Among conservatives, this analysis is depicted either as the actual state of affairs or as the desired or ideal state of affairs. The analysis of monopoly is important because, as we see in the next chapter, even though there are very few actual firms that fit the usual definition of a monopoly, most oligopolistic firms operate to some degree as though they are monopolies.