Note: This is post #41 in a weekly video series on basic microeconomics.

We tend to assume profit—the bottom line—is the main motivation for a firm’s actions, says economist Alex Tabbarok. For most firms most of the time, this is a good assumption, especially in petitive market. This video by Marginal Revolution University explores how pany maximizes profit in petitive environment where there are many buyers and sellers.

(If you find the pace of the videos too slow, I’d mend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)

Previous in series: Is it cleaner to trade pollution?