Perfect Competition in market economic

1. ADVANTAGES OF
PERFECT COMPETITION
Presented by –
Sanket Senapati

2. ADVANTAGES OF
PERFECT COMPETITION
Optimal allocation of resources:
Economic efficiency
Maximization & effectiveness of utility and
service.
COMPETITION ENCOURAGE EFFICIENCY:
 Tight competition between buyers
 Buyers get efficient as they embrace
change in the competitive market.

3. CONTD…….
CUSTOMERS BENEFIT:
LOW PRICE OF PRODUCTS OR SERVICE
PERFECT ENVIRONMENT FOR CONSUMER
CUSTOMERS NEED CHANGE
THE RESPONSE IS DRIVEN BY CUSTOMERS WISH.

4. DISADVANTAGES OF PERFECT
COMPETITION
LESS PROFITS:
COST OF PARTICIPATING THE
COMPETITION
PROFIT VS INVESTMENT.
DIVERSITY OF PRODUCTS
WIDTH AND DEPTH OF THE BRANDS
AND PRODUCTS
COST INVOLVED IN DEVELOPING
AND LAUNCHING NEW PRODUCT OR
SERVICE.

5. CONTD….
LIMITATIONS OF PRESENTATION:
PRODUCT DESIGNS
PRODUCT SPECIFICATIONS
INEQUALITY:
UNEQUAL DISTRIBUTION OF
GOODS(FOR EX HARD DISK)
UNEQUAL DISTRIBUTION OF
INCOME(EG GLITTER
TOOTHPASTE).

6. IS PERFECT COMPETITION
REALISTIC?
ASSUMPTIONS MARKET MUST
SATISFY TO BE PERFECTLY
COMPETITIVE ARE RATHER
RESTRICTIVE.
 IN VAST MAJORITY OF MARKETS
ONE OR MORE ASSUMPTION OF
PERFECT COMPETITION WILL,IN A
STRICT SENSE, BE VIOLATED
 YET WHEN ECONOMISTS LOOK AT
REAL-WORLD MARKETS THEY USE
PERFECT COMPETITION MORE
OFTEN THAN ANY OTHER

7. IS PERFECT COMPETITION
REALISTIC….
WHY IS THIS?
 MODEL OF PERFECT COMPETITION IS
POWERFUL
 MANY MARKETS-WHILE NOT STRICTLY
COMPETITIVE-COME REASONABLY
CLOSE.
WE CAN EVEN-WITH SOME CAUTION-
USE MODEL TO ANALYZE MARKETS THAT
VIOLATE ALL THREE ASSUMPTIONS.
PERFECT COMPETITIONS CAN
APPROXIMATE CONDITITIONS AND YIELD
ACCURATE ENOGH PREDICTIONS IN A
WIDE VARIETY OF MARKETS.