Episode 7 deals with the basic market structure in a free market economy, that is, the perfect competition market. Here, we will look at how a firm makes decisions on price and output in order to maximise profit. Discussion begins by introducing the characteristics of the perfect competition market, followed by means of maximising profit. Subsequently, the discussion focuses on the equilibrium of firm and market in the short run. Finally, we discuss how the firm and industry achieve equilibrium in the long run.