A presentation which shows basic differences between the Market Types and properties of the Market Structure. The types are: 1. Monopoly 2. Oligopoly 3. Monopolistic 4. Perfect Competition This slide provides a detailed explanation regarding the "Perfect Competition"

1. Principles of Economics
A PRESENTATION BY PRAVEEN KUMAR REDDY. M

2. Perfect Competition
Definition Characteristics Graphs
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3. Definition :
A Market Structure where Competition is at its
greatest possible level.
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4. Characteristics
 Large no. of buyers and sellers
 Products are Homogenous
 Free entry and exit of firms
 Zero advertising cost
 Transparency
 No government intervention
 Normal profits for each firm
 Price Takers
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5. Characteristics
1. Large number of Buyers and Sellers :
o Consumers with willingness and ability to buy
o Producers with willingness and ability to supply
the product at a certain price.
o Both are huge in number.
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6. Characteristics
2. Homogenous Products :
 The Products are Perfect Substitutes for each
other.
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7. Characteristics
3. Free Entry and Exit of Firms
4. Zero Advertising Costs
5. Transparency :
• Consumers have perfect knowledge about the
market and are well aware of any changes in the
market.
• Consumers indulge in rational decision making.
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8. Characteristics
6. Rational Buyers :
 Buyers will make all trades that increase their economic
utility.
7. Normal Profits for each firm :
 Each firm earns normal profits and no firms can earn super
– normal profits.
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9. Characteristics
8. Price Takers :
 Each firm is a Price taker. It takes the price as
decided by the forces of demand and supply.
 No firm can influence the price of the product.
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10. Description
 Ideally, perfect competition is a hypothetical
situation which cannot possibly exist in a
market.
 However, perfect competition is used as a
base to compare with other forms of market
structure.
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11. Graph
 Firms sell the products where the most
profit is generated, i.e., where Marginal Costs
meet the Marginal Revenue.
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12. Thank You !
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