market structure and market equillbrium

1. By
Khushi Maniktala
SEM 7
BTBM/20/113
A005116520017
Integrated
Biotechnology

2. WHAT IS A MARKET?
• Any location where two or more people can come together to
conduct an economic transaction, even one that doesn't require legal
cash, is referred to as a market.
• A market transaction can involve the transfer of any combination of
commodities, services, information, money, or other assets from one
party to another.
• Markets are places where buyers and sellers can come together and
conduct business.

3. Market Structure
• Market structure, in accordance with economic
theory, explains how businesses are distinguished
and grouped based on the kinds of goods they sell
and how those goods affect their operations.
• Understanding how different markets are structured
can help us better understand how markets operate.
• Market structure in economics refers to the quantity
of homogeneous, identical-producing enterprises.

4. DIFFERENT TYPES OF A MARKET
The types of market structures include the following:
1.Monopolistic
competition or
competitive
market
1.Perfect
competition
1.Monopoly 1.Oligopoly

5. MONOPOLY TYPE OF MARKET
• Since there is just one seller in a monopoly type of market structure,
one company will have complete market domination.
• Given its complete market dominance, it is free to establish
any price it likes. Customers have no choice but to pay the
price that the seller has set, Monopolies should never exist.
• Here, the consumer has no influence at all, and market forces
are no longer important. In actuality, pure monopolies are
quite uncommon.
• The Indian Railway, Google, Microsoft, and Facebook are a
few examples.

6. OLIGOPOLY TYPE OF MARKET
• A market with an oligopoly has a small number of companies.
Although the exact number of enterprises is unclear, 3-5 dominant
firms are thought to be the typical.
• Buyers outnumber sellers by a wide margin.
• In this scenario, the businesses either work together or compete
with one another.
• They set prices using their power in the market to increase their
profits. As a result, consumers start to accept prices.
• In an oligopoly, there are many obstacles to entrance into the
market, making it challenging for new businesses to get
established.
• Airlines, automakers, steel mills, petrochemical firms, and
pharmaceutical firms are a few examples.

7. Perfect Competition Market
• In a perfect competition market structure, there are a large
number of buyers and sellers.
• All the sellers of the market are small sellers in competition
with each other.
• There is no one big seller with any significant influence on the
market. So, all the firms in such a market are price takers.
• There are certain assumptions when discussing the perfect
competition. This is the reason a perfect competition market is
pretty much a theoretical concept. These assumptions are as
follows:
 The products on the market are homogeneous, i.e., they are
completely identical.
 All firms only have the motive of profit maximization, there is
free entry and exit from the market, i.e. there are no barriers.
There is no concept of consumer preference.
• Example: Agricultural Market

8. MONOPOLISTIC COMPETITION
• In monopolistic competition, there are still a large number of buyers as
well as sellers.
• But they all do not sell homogeneous products.
• The products are similar but all sellers sell slightly differentiated
products.
• Consumers have the preference of choosing one product over another.
• The sellers can also charge a marginally higher price since they may
enjoy some market power. So the sellers become the price setters to a
certain extent.
• For example, the market for cereals. The products are all similar but
slightly differentiated in terms of taste and flavors. Another such
example is toothpaste.

10. OVERVIEW TO MARKET EQULIBRIUM
• Market equilibrium is a market state where the supply in the market
is equal to the demand in the market. The equilibrium price is the
price of a good or service when the supply of it is equal to the
demand for it in the market.
Example of Equilibrium
• A store manufactures 1,000 spinning tops and retails them at $10 per
piece. But no one is willing to buy them at that price. To pump up
demand, the store reduces its price to $8. There are 250 buyers at that
price point. In response, the store further slashes the retail cost to $5
and garners five hundred buyers in total. Upon further reduction of
the price to $2, one thousand buyers of the spinning top materialize.
At this price point, supply equals demand. Hence $2 is the
equilibrium price for the spinning tops.

11. FACTORS FOR MARKET EQUILIBRIUM
1. Supply and Demand: The primary drivers of market equilibrium are the forces of supply and demand. When the
quantity of a good that consumers are willing to buy (demand) equals the quantity that producers are willing to
sell (supply), the market reaches equilibrium.
2. Price: The equilibrium price is the price at which the supply and demand curves intersect. At this price, there is
no excess supply (surplus) or excess demand (shortage) in the market.
3. Quantity: The equilibrium quantity is the amount of the good or service bought and sold at the equilibrium
price. It represents the point at which supply and demand are balanced.
4. Consumer Preferences: Changes in consumer preferences and tastes can shift the demand curve. For example,
if consumers suddenly prefer electric cars over gasoline-powered cars, it can lead to a shift in demand and affect
the equilibrium price and quantity in the automotive market.
5. Producer Costs: Changes in the cost of production can shift the supply curve. For instance, an increase in the
cost of raw materials can lead to a decrease in supply, which, in turn, affects the equilibrium.
6. Government Policies: Government interventions like taxes, subsidies, price controls, and regulations can disrupt
the market equilibrium. For example, a price ceiling may result in shortages, while a price floor may lead to
surpluses

12. GRAPH FOR MARKET EQUILIBRIUM
1.Supply Curve: The supply curve, typically upward-
sloping from left to right, shows the quantity of the good
that producers are willing to supply at different prices. In
general, as the price of the good increases, producers are
willing to supply more of it.
2.Demand Curve: The demand curve, typically
downward-sloping from left to right, represents the
quantity of the good that consumers are willing to buy at
different prices. As the price decreases, consumers are
usually willing to buy more of the good.
3.Equilibrium Price: The equilibrium price is the price at
which the supply and demand curves intersect. This is the
price where the quantity supplied equals the quantity
demanded. It is the point where the market is in balance,
and there is neither excess supply nor excess demand.
On the graph, it's the price at the intersection of the supply
and demand curves

13. THANK YOU