Special for student of JAIPUR NATION UNIVERSITY

1. Siilas campus
Presentation
Business Economics
(Perfect competition)
Presented BY- Vinay Kumar Verma
BBA/1/A/36

2. Index
• Introduction
• Assumption
• Demand curves Firm and Industry
• Short Run and Long Run
• Example
• Advantage of Perfect competition
• Conclusion

3. Introduction
a perfect market is defined by several conditions, collectively
called perfect competition.
• It is a theoretical model.
• Perfect competition is refer to the market.

4. Assumption
• Large no. of firm
• Individual firm are ‘price takers’
• Homogenous product
• Freedom of entry and exit
• Perfect knowledge of market
• Normal profit during long run

5. Demand curves Firm and Industry

6. Short Run and Long Run

7. Equilibrium under perfect competition
Total cost and Total revenue concept –
Profit on bases : TR>TC
TR=TC
• Production distance between
TR and TC Should be maximum.
• When the rate of changing in TR
and TC is same.
• TR should be more than TC or equal to it on equilibrium level.

8. Marginal cost of Marginal revenue
MC = MR
AC= AR
• On the equilibrium firm’s marginal cost
curve should cut marginal revenue
from below

9. Equilibrium the short-run
Some firms may earn super normal
profit in the short in equilibrium
condition, some firms suffer losses
and some firms earn normal profit
only.

10. Abnormal profit in Shot-run
A Firm in earning super normal profit in
short term when at the equilibrium
point firm average revenue is more
than the average cost.

11. Normal profit in Short-run
• Short term a firm can be in a situation
of no profit no loss.
• AR= AC in each other then firm is in a
situation of no profit no loss

12. Abnormal loss in Short-run
An abnormal loss refers to a situation
where a firm is making profits below
the normal limits. In an abnormal
loss situation the total revenue of a
business does not cover total cost
incurred for the firm.

13. Long-run Equilibrium
• In term of long run equilibrium only
earn normal profit where
P=AR=MR=MC=AC
• Long run equilibrium can be seen with
the help of long term average revenue
and marginal revenue curve.
• MC cuts MR on point E, So E is firm
equilibrium point.

14. Example

15. Advantage
• High degree of competition helps allocate resources to most
efficiency use
• Price = marginal cost
• Normal profit made in Long-run
• Firm operate at maximum efficiency
• Consumers benefit

16. Conclusion
• Perfect competition is the best
• Effective
• Always at equilibrium
• We are successful