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# Perfect competition market

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What is a Market? Explains about Markets and their types

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### Perfect competition market

1. 1. PERFECT COMPETITION Lecture on: (a) Features of Perfect Competition (b) Price and Output Determination B.TECH, (CSE) Managerial Economics and Financial Analysis 11-2-2013
2. 2. Features of Perfect Competition:  Large number of buyers and sellers  Homogenous products and services  Free entry and exit  Perfect information about market condition  Perfect mobility of factors of production  Uniform price level  No transport cost  Difference between firm and industry
3. 3. PRICE – OUTPUT DETERMINATION IN PERFECT COMPETITION  Prices are determined by demand and supply forces  The price and output are determined at the point where the demand and supply both are equal under perfect competition  This can be understood by taking an example and plotting it on the graph
4. 4. EXAMPLE AND DIAGRAMATIC EXPLANATION PRICE (Rs) DEMAND SUPPLY 5.00 200 600 4.00 300 500 3.00 400 400 2.00 500 300 1.00 600 200
5. 5. Diagrammatic Explanation: Y AXIS P D S R E I C E S D 0 X AXIS OUTPUT
6. 6. Price and output determination when demand changes and supply remains constant Y axis D1 S P1 D E1 P E D2 D1 P2 E2 D S D2 0 M2 M M1
7. 7. Price and output determination when demand remains constant and supply changes Y axis D S2 P1 E2 S S2 E P S1 S E1 P2 S1
8. 8. Price and output determination when both demand and supply are changed  Y D D1 p D2 S2 S S1 R P E2 E E1 I S D S1 D1 C S2 D2 E 0 M2 M M 1 X