ECONOMICS Presentation
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ECONOMICS Presentation Transcript:
1.ECONOMICS
Perfect Competition
Monopoly
Oligopoly
Monopolistic Competition
2.There are four distinct market models:
1) Perfect COMPETITION
2) PURE MONOPOLY
3) OLIGOPOLY
4) MONOPOLISTIC COMPETITION
Large number of sellers, differentiated products, non-price competition, easy entry.
3.Number of Firms?
4.PERFECT COMPETITION
5.Features
Very large number of buyers sellers: examples include farm commodities, stock market, and foreign exchange markets.
Standardized product: if the price is the same, buyers will be indifferent about which seller they buy a “homogeneous” product from.
“Price Takers”: individual firms exert no significant control over price.
Free entry and exit: no obstacles to entry--legal, technological, financial etc.
Perfect knowledge
No discrimination
No cost of transportation
Mobility of factors of production
6.Homogenous goods/services
Products perceived to be identical
Perfect substitutes
Consumers buy from cheapest provider
Each firm is a passive price taker
Firms face perfectly e l a s t i c demand curve for its product
7.Freedom of entry and exit
No barriers to entry /exit
No sunk costs
Entry and exit from the market feasible in the long run
If firms are making abnormal profits, new firms can easily enter the market
This assumption ensures all firm make normal profits in the long run
8.Perfect Information
Consumers have readily available info about the market – prices and products from competing suppliers
Can access info at zero cost
Few transaction costs involved in searching for price info
9.Many small firms
The firm’s demand curve is perfectly e l a s t i c because any firm that raises its prices sees demand fall to zero as consumers, with perfect knowledge, switch
10.Assumptions
Let’s look at some of the assumptions of perfect competition –
Under perfect competition market structure there are large number of buyers as well as sellers for a given product or service.
The price of a product or service is fixed and buyers who are willing to buy at that price can buy the product or service and sellers who are willing to sell the product or service at that price can sell it.
The product or service which is being sold under perfect competition market structure is similar or Homogeneous and that is the reason why sellers do not have any control over the price of a product.
Under perfect competition there are no entry and exit barriers which make it easy for companies to enter into the markets and sell the product or service.
All the buyers and sellers have complete information about the product or service which is being sold in the market.
Download
ECONOMICS Presentation Transcript:
1.ECONOMICS
Perfect Competition
Monopoly
Oligopoly
Monopolistic Competition
2.There are four distinct market models:
1) Perfect COMPETITION
2) PURE MONOPOLY
3) OLIGOPOLY
4) MONOPOLISTIC COMPETITION
Large number of sellers, differentiated products, non-price competition, easy entry.
3.Number of Firms?
4.PERFECT COMPETITION
5.Features
Very large number of buyers sellers: examples include farm commodities, stock market, and foreign exchange markets.
Standardized product: if the price is the same, buyers will be indifferent about which seller they buy a “homogeneous” product from.
“Price Takers”: individual firms exert no significant control over price.
Free entry and exit: no obstacles to entry--legal, technological, financial etc.
Perfect knowledge
No discrimination
No cost of transportation
Mobility of factors of production
6.Homogenous goods/services
Products perceived to be identical
Perfect substitutes
Consumers buy from cheapest provider
Each firm is a passive price taker
Firms face perfectly e l a s t i c demand curve for its product
7.Freedom of entry and exit
No barriers to entry /exit
No sunk costs
Entry and exit from the market feasible in the long run
If firms are making abnormal profits, new firms can easily enter the market
This assumption ensures all firm make normal profits in the long run
8.Perfect Information
Consumers have readily available info about the market – prices and products from competing suppliers
Can access info at zero cost
Few transaction costs involved in searching for price info
9.Many small firms
The firm’s demand curve is perfectly e l a s t i c because any firm that raises its prices sees demand fall to zero as consumers, with perfect knowledge, switch
10.Assumptions
Let’s look at some of the assumptions of perfect competition –
Under perfect competition market structure there are large number of buyers as well as sellers for a given product or service.
The price of a product or service is fixed and buyers who are willing to buy at that price can buy the product or service and sellers who are willing to sell the product or service at that price can sell it.
The product or service which is being sold under perfect competition market structure is similar or Homogeneous and that is the reason why sellers do not have any control over the price of a product.
Under perfect competition there are no entry and exit barriers which make it easy for companies to enter into the markets and sell the product or service.
All the buyers and sellers have complete information about the product or service which is being sold in the market.
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