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 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
- VERY LARGE NUMBER OF BUYERS AND SELLERS
- HOMOGENEOUS PRODUCT
- FREE ENTRY AND EXIT OF THE FIRM
- PERFECT KNOWLEDGE
- PERFECT MOBILITY
- ABSENCE OF TRANSPORTATION COSTS
- 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 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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