MARKET

The tern market refers not necessary to a place but always to a commodity and the buyers and sellers who are direct competition with one another.

 

PERFECT COMPETITION

Perfect competition is a market situation in which no seller can influence price by his independent action. In such a market a firm is only a price taker and industry is the price maker.”

 

FEATURES OF PERFECT COMPETITION

 

1. VERY LARGE NUMBER OF BUYERS AND SELLERS

 

2. HOMOGENEOUS PRODUCT

 

3. FREE ENTRY AND EXIT OF THE FIRM

 

4. PERFECT KNOWLEDGE

 

5. PERFECT MOBILITY

 

6. ABSENCE OF TRANSPORTATION COSTS

 

7. ABSENCE OF SELLING COSTS

 

Under perfect competition Industry is the price maker and firm is a price taker. Explain?

 

• Difference between industry and firm

 

• PRICE DETERMINATION

 

• AR & MR CURVE IN PERFECT COMPETITION

 

MONOPOLY

Monopoly is a market situation where there is a single seller and there is no close substitute of the commodity sold by the monopolist. It is very different for a new firm to enter in a monopoly market.”

 

FEATURES TO MONOPOLY

 

• SINGLE SELLER

 

• NO HOMOGENOUS PRODUCT / NO CLOSE SUBSTITUTES

 

• RESTRICTIONS ON ENTRY AND EXIT

 

• FULL CONTROL OVER PRICE / PRICE

 

• PRICE DISCRIMINATION

 

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