Perfect Competitive Market

Perfect competitive market

1. Welcome Perfect Competition Market

2. Meaning of Market A place / region where Sellers and buyers are interacted with goods and service by selling and purchasing at a given price. It is considered as a Process Goods and service Buyers and sellers A place or region Given price

3. Perfect Competition Market Classification of Market

4. Meaning of Perfect Competition Market “A Market situation in which a large number of producers or sellers producing and selling homogeneous product.”

5. Meaning of Perfect Competition Market “A Market situation in which a large number of producers or sellers producing and selling homogeneous product.”

6. Main features of Perfect Competition Market

7. Main features of Perfect Competition Market Example: Agricultural products

8. Meaning of Perfect Competition Market Nature of demand and AR, MR Curve of a firm Out put Price TR AR MR 1 10 2 10 3 10 4 10 5 10 6 10 7 10 8 10 Price Output Price=AR=MR Demand and AR, MR Curve of a firm Out put Price TR AR MR 1 10 10 10 10 2 10 20 10 10 3 10 30 10 10 4 10 40 10 10 5 10 50 10 10 6 10 60 10 10 7 10 70 10 10 8 10 80 10 10

9. Meaning of Perfect Competition Market Price determination in the industry Price Output Demand Curve Supply Curve Excess supply Excess Demand

10. Meaning of Perfect Competition Market Price determination in the industry Price Output Price=AR=MR Firm ( is a Price Taker) Price Output Industry Demand Curve Supply Curve First Condition for maximization of profit > MR= MC Second Condition for maximization of profit > MC curve cut MR curve from bellow

11. Meaning of Perfect Competition Market Price determination in the industry Price Output Price=AR=MR Firm ( is a Price Taker) Price Output Industry Demand Curve Supply Curve First Condition for maximization of profit is MR= MC Second Condition for maximization of profit is MC curve cut MR curve from bellow What is level of output of a firm ?

12. Meaning of Perfect Competition Market The firms equilibrium(Out put determination) Price Output Price=AR=MR Firm ( is a Price Taker) Price Output Industry Demand Curve Supply Curve MC O M MC=MR E E First Condition for maximization of profit is MR= MC Second Condition for maximization of profit is MC curve cut MR curve from bellow

13. Meaning of Perfect Competition Market Short run equilibrium of a firm with abnormal profit Profit Price Output Price=AR=MR Firm with Profit MC O M MC=MR E AC

14. Meaning of Perfect Competition Market Short run equilibrium of a firm with No profit No Losses Price Output Price=AR=MR Firm with Profit MC O M MC=MR E AC

15. Meaning of Perfect Competition Market Short run equilibrium of a firm with Losses Losses Price Output Price=AR=MR Firm with Profit MC O M MC=MR E AC

16. Meaning of Perfect Competition Market Long run equilibrium of a firm with Normal Profit Price Output Price=AR=MR Firm with Profit LMC O M MC=MR E LAC

17. Thanks Perfect Competition Market