1. PERFECT
COMPETITION
UNDER

2. T YPES OF MARKET
 Monopoly
 Oligopoly
 Monopolistic competition
 Perfect competition

3. PERFECT COMPETITION
Market structure where competition among sellers
and buyers prevails in its most perfect form.
 Large number of sellers and buyers
 Price taking
 Product homogeneity
 Free entry and exit

4. TABLE : PRICE DETERMINATION UNDER
PERFECT COMPETITION
Price Market Market Pressur
(Rs) Deman Supply e on
d Units Price
Units
5 10 50 D‹S
4 20 40 D‹S
3 30 30 D=S
2 40 20 D›S
1 50 10 D›S

5. What happens when price becomes higher or
lower then the Equilibrium Price ?

6. IMPORTANT OBSERVATIONS.
 Price under perfect competition is determined by the industry,
not by an individual firm.
 Price under perfect competition is known as equilibrium price
because it corresponds to equilibrium of the industry.
 An individual firm under perfect competition cannot change the
equilibrium price.
 Excess demand occurs when, corresponding to the existing
price, demand for commodity is greater than its supply (D › S).
 Excess supply occurs when, corresponding to the existing price,
supply of a commodity is greater than its demand (S › D).

7. SAY HELLO TO EBAY
Online marketplace
Large scale trade of varied items
3 segments
-market places
- payments
- communications
Source of revenue

8. WHY EBAY PERFECT COMPETITION
Products on the web site are available at prices
better than those one can find in traditional or
online stores. i.e. large buyers
Anyone can sell nearly anything i.e. large sellers
Transaction by individual buyer and seller is very
small therefore they are price takers.
Limit to each user for listing the product so no
chance of monopoly No possibility of economies of
scale

9. CONTI…..
 Competitive advertising does not occur
because the products are categorized and
sub- categorized into homogeneous
products.
 Entry and exit as a business in eBay is
quite easy.
 No browsing cost for buyers and the eBay
fee schedule identical selling costs for all
the sellers.
 Rational behavior and the part of sellers
and buyers ,eg: play station 3.

10. E-BAY AND PERFECT COMPETITION
eBay is a place to buy ,sell and window shop.
The products on the website have prices
better than traditional or other online stores.
Individual seller ,small retailer or big company
all are sellers and can sell nearly anything by
listing their items on eBay.
Huge variety of things are available with
enormous details

11. CONTI…
Buyers and sellers both are price takers.
Only 10 simultaneous listing for identical good is
allowed ,so no possibility of economies of scale.
Competitive advertising does not occur as products
are categorized and sub categorized into
homogeneous ones.
Entry and exit as a business on eBay is very easy.
Several sellers of common products and several
buyers are features of eBay.

12. BUYERS ADVANTANGE OF EBAY
 EASY AVALIBILIT Y - Whatever you want to
buy, whether its large or small, cheap or
expensive, everyday or just plain weird, the
chances are you can find it on eBay.
 AN online marketplace where you can buy things
from all over the world, without leaving your
home. You can get things that you would never
think anyone would bother to sell, and you can
get them cheaply. The powerful search engine
means that you can find things you will like
without even knowing exactly what you are
looking for.

13. CONTI...
Money can be send quickly and electronically
to almost all of these sellers, without worrying
about currency conversion or exchange rates
or anything else.
For bargains, eBay is an ideal place to buy.

14. THANKYOU