Perfect competition
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Transcript of Perfect competition
PERFECT COMPETITION
PRESENTED BY:
MADHU BALA
CONTENTS
• INTRODUCTION
• MEANING OF PERFECT COMPETITION
• CHARACTERISTICS OF PERFECT COMPETITION
• TWO VITAL CONCLUSIONS
• DEMAND CURVE
WHAT IS MARKET?
MARKET REFERS TO A MECHANISM OE AN ARRANGEMENT THAT FACILITATES THE SALE AND PURCHASE OF GOODS AND SERVICES.
PERFECT COMPETITION
IT IS A TYPE OF MARKET WITH LARGE NUMBER OF
BUYERS AND SELLERS.
CHARACTERISTICS OFPERFECT COMPETITION
LARE NUMBER OF FIRMS
LARGE NUMBER OF SELLERS
LARGE NUMBER OF BUYERS
HOMOGENEOUS PRODUCT
PERECT KNOWLEDGE
FREE ENTRY AND EXIT OF FIRMS
INDEPENDENT DECISION MAKING
PERFECT MOBILITY
NO EXTRA TRANSPORTATION COST
TWO VITAL CONCLUSIONS
I. A FIRM UNDER PERFECT COMPETITION IS PRICE
TAKER, NOT PRICE MAKER
II. DEMAND CURVE UNDER PERFECT COMPETITION IS
PERFECTLY ELASTIC.
DEMAND CURVE
DEMAND CURVE IS PERFECTLY ELASTIC FOR A FIRM.
IT MEANS THAT:FIRM CAN SELL ANY COMMODITY AT
AT THE PREVAILING PRICE.