From the course: Responsible Generative AI and Local LLMs

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Perfect competition

Perfect competition

From the course: Responsible Generative AI and Local LLMs

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Perfect competition

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- [Instructor] In perfect competition, all profit leads to zero. But what does this really mean? Well, we can look at this from the perspective of a small town that has many restaurants. Let's say there's four restaurants in town, and there's no real way to compete against another restaurant until a talented chef comes into town. Now everybody in the restaurant has to compete for this scarce resource to be the chef, because they're so talented, they bring in all of the customers to the restaurant. So what they do is they keep out competing each other and paying more and more salary until eventually the chef takes all of the profit because the chef is a limited or scarce resource. So this chef has rare and in-demand skills. There are many restaurants that are bidding for the chef's service, and then eventually the chef will negotiate a very high salary, and they'll capture all of the economic profit. So what does this mean, economic profit? It means that the total revenue minus the…

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