3. WHAT IS PERFECT COMPETITION ?
A large number of small firms
A homogeneous product
Very easy entry into or exist from the
market
Perfect competition is also referred to
as pure competition
4. FEATURES OF PERFECT COMPETITION
There are large number of buyers and sellers
No buyer or seller can influence the ruling
marker price by their own actions
All buyers and sellers possess perfect
market information
All units of commodity are homogeneous
Firms are free to enter and leave the market
at any time
5. A PERFECTLY COMPETITIVE MARKET
A perfectly competitive market must
meet the following requirements
Both buyers and seller are price takers
The number of firm is large
There are no barriers to entry
The firm’s products are identical
6. BOTH BUYERS AND SELLERS ARE PRICE TAKER
Price taker is a seller that has no control
over the price of the product it sells
In most markets, households are price
takers they accept the price offered in
stores
The retailer is not perfectly competitive
A retail store is not a price taker but a
price maker
7. THE NUMBER OF FIRM IS LARGE
Large means that what one firm does has no
bearing on what other firms do
Anyone firm’s output is minuscule when
compared with the total market
8. THERE ARE NO BARRIERS TO ENTRY
Barriers to entry are social, political or
economic impediments that prevent
other firms from entering the market
Barriers sometimes take the form of
patents granted to produce a certain
good
Technology may prevent some firms
from entering the market
9. THE FIRM’S PRODUCTS ARE IDENTICAL
This requirement means that each firm’s
output is indistinguishable from any
competitor’s product
10. WHY RICE IS A PRODUCT OF PERFECT
COMPETITIVE MARKET ?
There are large number of small firms
11. WHY RICE IS A PRODUCT OF PERFECT
COMPETITIVE MARKET ?
All firms produce a standardized or
homogeneous product
12. WHY RICE IS A PRODUCT OF PERFECT
COMPETITIVE MARKET ?
Easy entry
13. PERFECT COMPETITIVE IN WORLD MARKET
When trade barriers are neglieable
the price of domestic goods is
influenced by the world market price
The prices of rice in Vietnam fell in 1999
the supply of rice in the world
increased significantly
14. PERFECT COMPETITIVE IN WORLD MARKET
The price of a commodity traded on the
world market will depend on its price in
other countries
” The Law of One Price”
15. THE LAW OF ONE PRICE
The theory that the price of a given security,
commodity or asset will have the same price
when exchange rates are taken into
consideration
16. WHY DO WE NEED TO KEEP RICE PRICES
STABLE AND AFFORDABLE ?
High concentration of exports coming from
only a few countries
The international rice market is vulnerable to
disruptions in supply from major exporting
countries, leading to higher world price
In the international rice trade, a relatively
small number of exporting countries must be
interact with a large number of importing
countries
17. WHAT CAUSES FOR RICE PRICE TO RISE?
Supply going short
+ the decreasing trend in growth yield is due to
insufficient public investment in agricultural
research
+ contributed to poverty reduction directly
through increased income for rice farmers
+ indirectly through lower prices of rice due to
the steady supply brought about and the
overall increase in global rice production
18. WHAT CAUSES FOR RICE PRICE TO RISE?
Demand increases
+ Economic growth in large countries
such as India and China has increased
the demand for cereals livestock
consumption
+ Africa has been importing rice
accounting to one third of the total world
trade