MARKET STRUCTURES AND PRICING
Concept of market structures
Perfect competition market and price determination
Monopoly and abnormal profits
Monopolistic Competition
Price Discrimination
Oligopoly-Features of oligopoly
Syndicating in oligopoly
Kinked demand curve
Price leadership and market positioning
Conditions for Company Equilibrium
To achieve Equilibrium, a Company must meet two conditions:
You need to make sure that the marginal revenue is equal to the marginal cost (MR = MC).
If MR> MC, the Company has an incentive to expand production and sell additional units.
If MR<MC, the Company needs to reduce production because additional units generate more costs than revenue.
Only when MR = MC does the Company achieve maximum profit.
MARKET STRUCTURES AND PRICING
Concept of market structures
Perfect competition market and price determination
Monopoly and abnormal profits
Monopolistic Competition
Price Discrimination
Oligopoly-Features of oligopoly
Syndicating in oligopoly
Kinked demand curve
Price leadership and market positioning
Conditions for Company Equilibrium
To achieve Equilibrium, a Company must meet two conditions:
You need to make sure that the marginal revenue is equal to the marginal cost (MR = MC).
If MR> MC, the Company has an incentive to expand production and sell additional units.
If MR<MC, the Company needs to reduce production because additional units generate more costs than revenue.
Only when MR = MC does the Company achieve maximum profit.
Students should be able to:
Understand the assumptions of perfect competition and be able to explain the behaviour of firms in this market structure.
Understand the significance of firms as price-takers in perfectly competitive markets. An understanding of the meaning of shut-down point is required. The impact of entry into and exit from the industry should be considered.
Class: Economics20: Consumer Economics
Sub Topic:
- Pure Competition
- Assumption of Profit Maximization
- Comparison of total cost and total revenue
- Comparison of marginal revenue and marginal cost
Students should be able to:
Understand the assumptions of perfect competition and be able to explain the behaviour of firms in this market structure.
Understand the significance of firms as price-takers in perfectly competitive markets. An understanding of the meaning of shut-down point is required. The impact of entry into and exit from the industry should be considered.
Class: Economics20: Consumer Economics
Sub Topic:
- Pure Competition
- Assumption of Profit Maximization
- Comparison of total cost and total revenue
- Comparison of marginal revenue and marginal cost
CV Raman is the legend among the Indian scientists, who completed the whole education in the country and get Nobel prize in 1930. A DETAILED PRESENTATION IN TELUGU
This book reveals many facts how vivekananda influenced many Modern scientists and Instututes in India and World as well, includes IISc, CV Raman, SN Bose, Nicolas Tesla and many more.
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
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Welcome to TechSoup New Member Orientation and Q&A (May 2024).pdfTechSoup
In this webinar you will learn how your organization can access TechSoup's wide variety of product discount and donation programs. From hardware to software, we'll give you a tour of the tools available to help your nonprofit with productivity, collaboration, financial management, donor tracking, security, and more.
Biological screening of herbal drugs: Introduction and Need for
Phyto-Pharmacological Screening, New Strategies for evaluating
Natural Products, In vitro evaluation techniques for Antioxidants, Antimicrobial and Anticancer drugs. In vivo evaluation techniques
for Anti-inflammatory, Antiulcer, Anticancer, Wound healing, Antidiabetic, Hepatoprotective, Cardio protective, Diuretics and
Antifertility, Toxicity studies as per OECD guidelines
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COURSE OUTCOMES:
1. Understand of various aspects of managerial economics,
demand analysis.
2. Understand the use of demand elasticity and various
methods of demand forecasting techniques in
Managerial decisions.
3. Apply production theory, cost theory in relevant
Managerial decision making.
4. Understand the differenced between price output
determination under different market conditions along
with pricing policies.
5. apply capital budgeting, financial analysis techniques in
evaluating various investment opportunities.
MEFA U4
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Price output determination under different
Markets & Pricing Policies:
Market Structures: Types of competition, Features
of Perfect Competition, Monopoly and Monopoly
Competition, Price-Output Determination under
Perfect Competition, Monopoly, Monopolistic
Competition and Oligopoly Managerial theories of
the firm – Marris and Williamson‟s models.
Pricing Policies: Methods of pricing.
MEFA U4
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UNIT 4
Price output determination under different
Markets & Pricing Policies
What is mArket?
Market is a place where buyer and seller meet, goods
and services are offered for the sale and transfer of
ownership occurs.
MEFA U4
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Different Market Structures
Market structure describes the competitive
environment in the market for any good or service. A market
consists of all firms and individuals who are willing and able
to buy or sell a particular product.
The determination of price is affected by the competitive
structure of the market.
MEFA U4
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Perfect Competition
In a perfectly competitive market, a single market price
prevails for the commodity, which is determined by the
forces of total demand and total supply in the market.
MEFA U4
Characteristics
A large number of buyers and sellers
Homogeneous product
Free entry and exit
Perfect knowledge
Indifference: No buyer has a preference to buy from a particular
seller and no seller to sell to a particular buyer.
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Pricing under perfect competition
The price or value of a commodity under perfect
competition is determined by the demand for and the
supply of that commodity.
Each firm supplies only very small portion of the market
demand. No single buyer or seller is powerful enough to
influence the price.
the main problem of a firm in a perfectly competitive
market is not to determine the price of its product but to
adjust its output to the given price, So that the profit is
maximum.
MEFA U4
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Price Determination
The price determined in very short period
is known as Market price.
The nature of the commodity determines
the nature of supply curve in a market
period.
1) Perishable Goods
2) Non-Perishable Goods
MEFA U4
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Monopoly
Monopoly is a form of market organization in which there
is only one seller of the commodity.
There are no close substitutes for the commodity sold by
the seller.
Characteristics
Single person or a firm
No close substitute
Large number of Buyers
Mono - Price Maker
Downward Sloping Demand Curve
MEFA U4
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Seller has complete control over the supply of a
commodity. He is therefore in a position to fix any price.
Under monopoly there is no distinction between a firm
and an industry.
MEFA U4
Pricing under Monopoly
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Price output determination (Equilibrium Point)
In the diagram (Average revenue) = MQ or OP
Average cost = MR
Profit per unit = Average Revenue-Average cost=MQ-MR=QR
Total Profit = QRXSR=PQRS
If AR > AC -> Abnormal or super normal profits.
If AR = AC -> Normal Profit
MEFA U3
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Monopolistic competition
Every market seems to exhibit characteristics of both
perfect competition and monopoly.
Monopolistic competition state of imperfect competition
lying between these two extreme limits that work.
Characteristics:
Existence of Many firms
Product Differentiation
Large Number of Buyers
Free Entry and Exist of Firms
Imperfect Knowledge: Imperfect knowledge about the product. If the
buyers are fully aware of the quality of the product they cannot be influenced
much by advertisement or other sales promotion techniques.
MEFA U4
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Each firm will set the price and output of its own
product.
Here also the profit will be maximized when marginal
revenue is equal to marginal cost as in case of Monopoly.
MEFA U4
Pricing under Monopolistic
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Oligopoly competition
Oligopoly is the form of imperfect competition where
there are a few firms in the market, producing either a
homogeneous product or producing products, which are
close but not perfect substitute of each other.
Characteristics:
Existence of Few firms
Indeterminate Demand Curve
Advertising and selling costs: greater role in the oligopoly market
compared to other market systems
MEFA U4
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OTHER MARKET STRUCTURES
1. Duopoly
Duopoly refers to a market situation in which there
are only two sellers. Eg. Coca-Cola and Pepsi
2. Monopsony
Market, which there is a single buyer.
It may be created when all consumers of a commodity are organized together
and/or when only one consumer requires that commodity which no one else
requires.
3.Bilateral Monopoly
A bilateral monopoly is a market situation in which a single seller (Monopoly) faces a single
buyer (Monopsony).
MEFA U4
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PRICING METHODS
MEFA U4
The micro – economic principle of profit maximization suggests
pricing by the marginal analysis. That is by equating MR to MC.
firms set prices for their products through several alternative
methods:
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PRICING METHODS …
1. Cost Based Pricing:
Full – cost or break even pricing:
price = average (total) cost.
Cost plus pricing
price = average (total) cost + (…)
Marginal cost pricing.
price = marginal cost
MEFA U4
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PRICING METHODS …
2. Competition based pricing: priced according to the
competition in their markets …
going rate method:
prices its new product according to the prevailing
prices of comparable products in the market. …. when
television was first manufactures in India, its import cost must
have been a guiding force in its price determination..
sealed bid pricing
in the case of construction activities and in
the disposition of used produces. In this method
the prospective seller (buyers) are asked to quote
their prices through a sealed cover.
MEFA U4
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PRICING METHODS …
1. Demand Based Pricing:
Perceived value pricing
..pricing considers the buyer’s perception of the value of
the product.
Differential pricing
…different prices in different market
segments.
MEFA U4
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PRICING METHODS …
1. Strategy based pricing (new product pricing):
skimming pricing:
new product is priced high in the beginning, and its price
is reduced gradually as it faces a dearth of buyers..
….strategy may be beneficial for products, which are fancy, but
of poor quality and / or of insignificant use over a period of
time.
Cost plus pricing
firms sell their new product at a low price
in the beginning in order to catch the attention of
consumers, once the product penetrates.. seller
slowly starts hiking prices.
MEFA U4