The document discusses different market structures:
- Perfect competition has many small sellers and buyers, homogeneous products, free entry and exit, and perfect information. Buyers and sellers are price takers.
- Monopoly has a single seller, unique product, barriers to entry, and market power to set price.
- Oligopoly and monopolistic competition are between perfect competition and monopoly with few sellers and differentiated products.
2. The place where buyers and sellers meet
Price plays an important role
Market is the whole set of arrangement
for buying and selling of commodity or
services.
4. 1) Many seller in the market:
In the perfect competition in the sellers are
many numbers. In the competition sellers are
not a industrial. They are not a decide the price.
2) Many buyers in the market:
individual buyers can not control price by
changing because the buyer is very small part of
total numbers of buyers. Every buyers are price
taker not a price maker
5. 4) Zero advertisement cost:-
in the competition there are many sellers in
the one market & all the product are same so
there is no chances of product differentiate so
there is no advertisement cost
3) Free entry & Free exit:-
There are no need to take permeation in the
market for the entry or exit.
Entry of the new seller from effect the market
like supply & demand.
Exit of the old seller from effect the market like
supply & demand
6. 6) Homogeneous product:-
Products are same in the size, shape, quality,
quantity, tread marks, color, etc…
5) Perfect knowledge:-
Buyer & seller have perfect knowledge
about market & price of product no buyers will
pay price high then market
And no sellers to take the lower price then
market.
7. 8) Perfect mobility of factors
In the perfect competition it is important to
keep supply as same as demand if all factor are
easily available 1 product to one other product it
become easily to adduct supply asper demand.
7) No transport cost:-
Buyers And sellers is close to the market so
the no transport cost.
8.
9. AR = TR/Q
TR = P X Q
AR = P X Q/Q
AR = P
Because firms are price takers. The
price is the same for all sellers.
MR = P
MR = TR Each additional unit of output
The change in TR is always P
So MR = P